Budget to hit Shs47t as govt monetises economy
What you need to know:
- The strategy is laid out in the latest budget estimates for the forthcoming financial Year, tabled by Junior Finance minister Amos Lugoloobi in Parliament on Friday.
The government has revealed that it has no intention of bringing new taxes during the 2022/2023 Financial Year (FY). It rather says more investment will be channeled to agriculture, industry and the Parish Development Model in an attempt to monetise an economy ravaged by the pandemic.
The strategy is laid out in the latest budget estimates for the forthcoming financial Year, tabled by Junior Finance minister Amos Lugoloobi in Parliament on Friday.
The annual budget has been increased by Shs2.5trillion compared to the current financial year. The Shs47.2trillion proposed budget will be implemented under the theme: “Full monetisation of the Ugandan economy through commercial agriculture, industrialisation, expanding and broadening services, and digital transformation and market access.”
Its overall goal is increased household incomes and improved quality of life of Ugandans.
The Public Finance Management Act mandates the Finance ministry, on behalf of the President, to table the budget estimates by April 1. Initial estimates in the Budget Framework paper tabled in December last year had seen the budget drop to Shs43 trillion.
Mr Lugoloobi, however, explained that some priorities—including the development of the oil sector; building a refinery, pipeline and the airport—necessitated the increase.
Shs1trillion of the budget is expected to go to the Parish Development Model, the latest government vehicle fronted to lift over 17.5million Ugandans in 3.5million households into the money economy. Starting July, each parish is expected to receive Shs100m that will be lent out to citizens for investment.
“This is an investment-like budget because the intent of this budget is to achieve full monetisation of the economy to ensure that nobody is left behind. And the implication of this is that we have to take money to the people. Not money to consume but money to invest,” Mr Lugoloobi said.
He added: “We are moving very strongly to organise these small producers at the village and parish level to start producing Saccos. So we are going to see more than 10,000 Sacoos formed at the parish level.”
Exciting to many Ugandans grappling with soaring commodity costs, however, could be the pledge to not to levy new taxes. The prices of some basic goods like fuel and soap have lately been on an upward trajectory, prompting some legislators to call for waivers.
The ministry still hopes to finance the largest part of the budget through tax revenue. Over nine tax Bills were tabled that junior Finance minister Henry Musasazi says will streamline tax administration.
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While Shs28 trillion will be available to the government for spending, a large chunk of the budget is expected to be channeled to servicing the national debt that has since exceeded the ceiling provided for in the charter of fiscal responsibility. Consequently, the government says it will only borrow Shs1.7 trillion of the funds.
“We have to continue borrowing although we have scaled down…we have a charter that governs us which stipulates we should not exceed 53.1 per cent and now the debt to GDP is at 53.9 per cent… Nonetheless, we expect this to be restored to 47.8 per cent of GDP over the medium term,” Musasazi said.
Uganda currently owes Shs69.5 trillion. As per the December BFP, Shs7.4trillion of the budget of Shs43 trillion was to be spent on servicing the public debt.
Mr Lugoloobi also says they will strive to limit supplementary budgets. Mr Lugoloobi also presented before Parliament the revised National Budget Framework Paper (BFP) 2022/2023, 2026-2027, the Appropriation Bill, 2022, Charter of Fiscal responsibility and Certificate of Gender and Equity Compliance, among others.
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The Deputy Speaker, Mr Thomas Tayebwa, who chaired the Friday sitting referred the budget estimates to the Parliamentary Budget Committee and relevant sectoral committees for processing and final appropriations.
