Budget plans for next year unveiled

A working document laying out national budget planning for the 2024/2025 fiscal period has revealed that government anticipates very marginal revenue growth over the coming financial period.

Finance minister Matia Kasaija told a budget conference in Kampala that the country’s total resource envelope will amount to Shs52.722 trillion, a figure which more or else imitates what is available in the current fiscal year.

The announcement was made as he presented Uganda’s Budget Strategy for Financial Year 2024/2025 at a conference convened at Kampala Serena Hotel yesterday. The minister told his audience that domestic revenue is projected to only very slightly increase from what is expected this year.

Revenue inflows next financial year are projected to amount to about Shs29.957 trillion, up from 29.672 trillion this year – which suggests a growth of a little over Shs200 billion.

That hard financial reality has had an immediate impact, taking a toll on what the government will be able to share out amongst the country’s various socio-economic programmes.

“Due to the large debt servicing costs, the government resources available for allocation have reduced to Shs21.734 trillion for FY2024/25, from Shs25.205 trillion this financial year,” the minister warned.

Next year’s budget theme remains a mouthful. It also replicates the ambition described in the outgoing year: ‘Full monetisation of Uganda’s economy through commercial agriculture, industrialisation, expanding and broadening services, and digital transformation and market access.’

To fulfill the aspirations captured under the theme, Mr Kasaija said emerging government priorities will be financed within the principles of the fiscal consolidation agenda, which was emphasised in this year’s budget speeches.

 Although there was no direct reference to likely adverse effects resulting from the loan financing freeze announced by the World Bank in August, the minister’s revelations seemed to acknowledge the hole that has been left in the national pocket.

Slightly over Shs6.7 trillion in project and other development financing has been snuffed out by the freeze. At issue is Uganda’s new and widely popular law, which criminalised all sorts of homosexual activity in the country. In response, the government has, among others, promised to cut back wasteful spending, instituting tougher austerity measures, while also looking to enhanced cooperation with other less problematic development partners.

“As we start the budgeting process for FY 2024/2025, we should be cognisant of the resource limitations, including domestic revenue and limited space for borrowing. Therefore, the ministry will be unable to accommodate all MDA priorities,” Mr Kasaija said.

It is in that statement that Mr Kasaija makes an oblique reference to the implications of the World Bank’s suspension of aid to Uganda. But he also remained confident of future prospects despite prevailing difficulties

“The implementation of strategic interventions such as the Parish Development Model, development of the minerals sector, agro-industrialisation and manufacturing, among others, will spur economic growth to 6 percent by end of FY2023/24, and to 6.5 percent in FY 2024/2025,” he said.

Mr Kasaija said he sees an acceleration to an average of economic growth rate of at least 7 percent over the medium term. The minister said this will largely be driven by growth in industry, services and agriculture sectors.

During the presentation of the current National Budget on June 15, President Museveni challenged the Finance ministry to grow Uganda’s economy to $500 billion.

In his presentation, Mr Kasaija also said achieving strategic objectives, which include increasing the size of the economy to $500 billion in the next 15 years, means the budget will focus on building an integrated, independent and self-sustaining economy.

A quick look through his working document showed that Mr Kasaija has not departed much from measures he announced in June.

He again promises to continue maintaining macroeconomic stability (keeping inflation low and debt sustainability) through implementation of fiscal consolidation interventions. Boosting household incomes and microenterprises through the Parish Development Model and commercialising agriculture to enhance production and improve competitiveness is also repeated in the plans for next year.

At the same conference, Prime Minister Robinah Nabbanja echoed the Finance minister’s position.

“Our major task now is adherence to effective implementation of Uganda’s fiscal consolidation agenda, which includes the following: effective implementation of domestic revenue mobilisation strategy; effectiveness and efficiency of public expenditure management; and controlling non-concessional borrowing through effective implementation of the Medium -Term Debt Reduction Strategy,” she said.

Budget strategy

The ultimate goal of the Budget Strategy for FY 2024/2025 is to accelerate economic growth to at least 7 percent in the medium term. The intention is build an independent, integrated, and self-sustaining economy.

 This will involve transitioning from reliance of raw material exports to a manufacturing and knowledge-based economy; as well as improving and making the environment of doing business in Uganda more competitive.

 -Agricultural production and value addition: Through identification of more valuable agricultural commodities to anchor agro-industrialisation, for example: dairy products, fish, oil palm.

 -Further development of oil and gas sector and the petro-chemical industry.

-Development of the mining sector and its value chains through establishment of a conglomerate of companies that will undertake mineral processing in Uganda.

-Unlocking the constraints to tourism development

-Investing in the people: Human capital development by assuring a healthy population and a skilled labour force through quality healthcare, education and safe and clean water.

-Investment in science, innovation, research and development: This will be undertaken in all spheres of production and business.

-Digital transformation and automation

-Work towards public sector effectiveness and accountability.

-Addressing security and good governance issues