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Those of us who go to borrow are treated like children, says Kasaija
Mr Kasaija says Ugandans must take a decision so that the country can get a reasonable amount of budget financing from local revenues. Photo / File
What you need to know:
- Mr Kasaija says there was need to mobilise more revenues domestically by closing tax leakages to stop reliance on borrowing and grants
Finance Minister Matia Kasaija has said government officials who go abroad to borrow money on behalf of Uganda are treated like children, signaling the challenges that the country goes through to source financing.
While delivering the Budget Speech in Kampala yesterday, Mr Kasaija said there was need to mobilise more revenues domestically by closing tax leakages and expanding the tax base to stop reliance on borrowing and grants.
“We must raise more revenue and reduce reliance on borrowing and grants. I repeat; we must raise more revenue and reduce reliance on borrowing and grants. Those of us who go to borrow, they take us as if we are children. They look at you; go today, come tomorrow, go today, come tomorrow. Ahh! No,” he said, noting that Ugandans must take a decision so that the country can get a reasonable amount of budget financing from local revenues.
Uganda's tax-to-gross domestic product ratio stands at about 14 percent, which is below the 16 percent average for sub-Saharan Africa.
Uganda’s public debt has been growing exponentially and is projected to increase to Shs97.6 trillion ($25.7b) by June 30 - the last month of the 2023/24 financial year.
This will be an increase of at least Shs4.3 trillion in the six months to June from the Shs93.3 trillion, which the Ministry of Finance quoted in December 2023.
Public debt remains a serious challenge to revenue mobilisation, with at least Shs30 for every Shs100 collected by Uganda Revenue Authority going into debt servicing.
Government is expected to borrow further to finance the Shs72.1 trillion 2024/25 Budget, part of which will be financed by domestic revenues - projected at Shs32 trillion – while the rest of the money will come from domestic borrowing, budget support, grants, and loans, among others.
During the 2024/25 financial year, Uganda Revenue Authority is expected to collect at least Shs29.3 trillion from taxes, while Shs2.6 trillion will be raised from non-tax revenues.
However, Mr Kasaija indicated that although the stock of public debt had increased, the ratio of debt to gross domestic product remained within sustainable levels, but noted government was taking several measures through which it will limit borrowing to key sectors of the economy.
“As a result of our fiscal consolidation agenda, which is intended to enhance revenue collection, we shall limit borrowing to only critical and strategic investments and control government expenditure. Government is committed to keeping debt sustainable. Most importantly, the money we have borrowed has been invested well and these investments have started to give good results,” he said.
Mr Kasaija also noted that 29 percent of the borrowed money has been invested in improving transport infrastructure, while 28 percent went to development of energy infrastructure, 12 percent to improving water sources, and an equal share of 5 percent invested in agro-industrialisation, and development of industrial parks and the national backbone infrastructure, respectively.
Government is expected to register a Shs1.7 trillion shortfall, with domestic revenue for the 2023/24 financial year expected to close at Shs27.25 trillion against a target of Shs29.9 trillion.
