Civil society want govt to increase budget for domestic arrears

Civil Society Budget Advocacy Group (CSBAG) has said the Shs200b that Ministry of Finance committed to set aside each financial towards payment of domestic arrears is insufficient to lessen the current burden faced by government suppliers. 

Speaking before the Committee on Finance, Planning, and Economic Development, Mr Patrick Rubangakene, a CSBAG economist, said the problem of piling domestic arrears will continue and is likely to negatively impact economic growth that is currently facing a number of negative fundamentals. 

“We appreciate the Finance Ministry for developing a strategy to clear and prevent domestic arrears in June 2021. However, domestic arrears have continued to increase annually from Shs2.75 trillion in 2018 to Shs7.55 trillion in 2022,” Mr Rubangakene said.

The growth was remarkable during 2022, in which the Auditor General indicated that domestic arrears had risen from Sh4.65 trillion in 2021 to Sh7.55 trillion. 

Therefore, CSBAG said, there was urgent need for government to address the issue before it gets out of hand. 

Mr Rubangakene also urged government to consider sanctions and fines against any accounting officers, who without any reasons, accumulates domestic arrears against contracting frameworks.

CSBAG also cautioned against growing public debt burden, which, by June 2022 had increased to 78.9 trillion but had slightly reduced to Shs76.5 trillion by September 2022. 

The growth has largely been driven by heavy borrowing to finance large infrastructure projects, such as Standard Gauge Railway and Karuma and Isimba dams. 

Currently, debt repayment takes the largest share of mobilized tax revenues, which stifles financing to priority sectors of the economy. 

However, other agencies such as the World Bank and International Monetary Fund, continue to indicate that Uganda’s debt is still within sustainable levels despite growing vulnerabilities. 

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