How govt plans to finance Shs43t budget

The government is projecting an increase in tax collection to finance more than half of the Shs43 trillion budget for the Financial Year 2022/2023.
According to the National Budget Framework Paper tabled in Parliament by the State Minister of Finance in-charge of General Duties, Mr Henry Musasizi, on Wednesday, the government projects to raise Shs25.5 trillion as domestic revenues. 
Of this, Shs23.75 trillion is projected to be raised from tax sources up from Shs20.131 trillion in the current financial year.

“The good news is on the revenue side, we are seeing a rise. We project to collect more tax revenue than we are collecting this year and that is a positive because we are moving towards narrowing the fiscal deficit,” Mr Musasazi said.
Mr Ibrahim Bbosa, the Uganda Revenue Authority spokesperson, however,  said this may not translate into higher or new taxes for the population. 
He said the tax body will work to widen that taxbase, ensure compliance and plug the leakages to meet the target set.

Government also expects to borrow Shs9.7 trillion both externally and domestically,   while Shs212b will be from local government revenues. Domestic refinancing will make up for Shs7.6 trillion
Finance minister Matia Kasaija’s overall budget is projected to shrink by about Shs1.5 trillion, from Shs44.7 trillion in the 2021/2022 budget to Shs43 trillion.
Mr Musasazi attributed the reduction in the resource envelope to expiry of some projects and a fall in donor funding.

According to the framework paper, budget support has reduced by Shs2 trillion from the current financial year.
About 17 percent [Shs7.4 trillion] of the budget is to be spent on servicing the public debt, which according to the paper has increased from Shs57.2 trillion in June 2020 to Shs69.5 trillion in June this year corresponding to a 27.4 percent increase.
“Amortisation of external debt is projected to increase to Shs2,463 billion…Interest payments are projected to amount to Shs5, 088 billion in FY 2022/2023. Of this amount, Shs4,059 billion is projected to cover domestic interest payments while Shs1,029 billion will cater for foreign interest payments and commitment fees,” the framework paper reads in part.

According to Finance, the far reaching impacts of the Covid-19 pandemic, the slowdown in growth and additional expenditure requirements to finance response measures further constrained fiscal space and necessitated additional borrowing.
The 2022/2023 budget, under the theme; Full monetisation of the Ugandan Economy through involvement of Rural Households into commercial agriculture, industrialisation and market access, will prioritise security, revitalising business activity after two years of a pandemic disruption and enhance socio-economic transformation by redirecting budgetary resources towards wealth and job creation, industrialisation, export promotion.

“The economic strategy in the short to medium term has the twin objectives of restoring economic activity to pre-pandemic levels and subsequently accelerating the pace of socioeconomic transformation. Economic recovery will be achieved by boosting aggregate demand by restoring domestic consumption, renewing private and public investment, and enhancing export promotion,” the budget framework paper states
Government indicates that focus will be put on sectors with high returns, including manufacturing, tourism, infrastructure development, agro-industrialisation and light manufacturing, oil and gas, among others.

The strategy is expected to boost economic growth to 7 percent up from 3 percent in the current financial year.
Government is also looking at reducing government expenditure to reduce borrowing through freezing creation of new administrative units and rationalisation of government agencies.
Sessional committees, and then the budget committee will scrutinise the budget, and the various vote allocation when Parliament resumes next year.

Source                                                                          2021 /2022                 2022 /2023

Domestic Revenues                                                            22.4t                          25.5 trillion
Budget Support                                                                    3.6t                          1.29 trillion
Domestic Financing                                                                    2.94t                   2.8 trillion
Project Support (External Financing)                              6.86t                              5.58 trillion
Domestic Refinancing (Roll-over)                                      8.55t                               7.65 trillion
Local Revenue for Local Govts                                              0.212t                        0.212 trillion
Total resource inflows                                                             44.78t                 43.08 trillion