Re-assess budget financing, economists ask government

Finance Minister Matia Kasaija (left) and State Minister for Finance, Henry Musasizi (right) at Kololo independence grounds. The national budget will be financed through improved revenue collection and controlled borrowing.  PHOTO/David Lubowa

What you need to know:

Part of Uganda’s budget challenge is the unchecked financing strategy facilitating the luxurious expenditure of government, that is often times manifested through frequent supplementary budgets. 

National Budget implementation and financing strategy leaves a lot to be desired, according to independent budget policy specialists. 
As a result, there are calls for the country’s economic managers to double their efforts to rid of unnecessary expenditure in the wake of dwindling revenue collection targets.  

With the recent unveiling of nearly Shs53 trillion budget for the next financial year coinciding with dishing out of Shs3 billion high-end vehicles to the former Speakers of Parliament, a section of economists and policy analysts interviewed for this article, are worried for the national budget, going forward.  

Borne out of this fear as exemplified by the Finance ministry’s December 07 letter asking Uganda Revenue Authority’s top leadership to, among other things, explain the Shs600b revenue deficits registered between July and October, the first four months of the half year of 2023/24 financial year, the executive director, Civil Society Budget Advocacy Group (CSBAG), Mr Julius Mukunda, says in an interview:  “There is no better time for government to embrace frugality than now.”

According to Mr Mukunda, part of the budget challenge is the unchecked financing strategy facilitating many of the luxurious expenditure of government often times manifested through frequent supplementary budgets. 
Supplementary estimates must be strictly regulated and their number limited. 

“Our analysis shows that 90 percent of the supplementary budget does not qualify to be supplementary expense. Most of the supplementary budgets are as a result of poor planning and in some cases, competence issues,” he says, adding: “We fear that many of the supplementary budgets are not only unwarranted financing strategies but could be a recipe for corruption.”

Citing CSBAG analysis, Mr Mukunda notes that there is no justification for failure to plan for core mandates, stressing that each time a supplementary for something that should have been planned for happens, there should be cause for suspicion and further probing. 

In an interview on Tuesday, Mr Mukunda, an economist, says the Shs52.7 trillion budget expected to finance the country’s programmes and services in the next financial year – about six months away, will not achieve its service delivery and poverty eradication objectives without focusing on prudent management of the resources in the national budget. 

Revenue collection              
“You can hit revenue collection targets in an ailing economy,” says Mr Mukunda, adding: “Only about 10 percent of the 3.2 million people on the tax register pay their taxes regularly.” 

This situation is complicated by what he describes as increasing cost of the Central Bank Rate , saying the Bank of Uganda regular action has an effect which includes increasing interest rate at which private sector players – businesses can borrow. 

“The atmosphere in which the private sector makes money is quite challenging and if government programmes and decisions cannot facilitate the private sector have a return on their investment then how will revenue be generated?” 

While unveiling the Shs53trillion budget for next financial year, the State Minister for Finance in charge of General Duties, Mr Henry Musasizi, said the government plans to fund the budget with resources from improved revenue collection and controlled borrowing. Whereas this is reasonable, the financing strategy that should be above everything else, according to Mr Mukunda, is: “Budget discipline, frugality and optimising efficiency. If this is done well, there is a chance that other pieces of the puzzle will fit together.