Experts query govt spending plan

One week after national budget day, economists and public policy specialists have continued to ask searching questions about the government’s spending priorities.

Speaking at a post-budget public dialogue in Kampala on Monday, June 19, several experts criticised the government’s approach to public healthcare, climate change, and spiraling public debt.

Mr Arthur Bainomugisha, who leads a public policy and research think tank, said slashing allocations for climate change financing from two percent to one percent of the 2023/2420 budget was ill-advised in an agriculture-based economy.

“As I talk, western Uganda has been hit by drought and the consequence of that is food shortage so the permanent secretary can explain why they reduced the climate change financing,” the executive director at the Advocates Coalition for Development and Environment (Acode) said.

Similarly,  Mr Fred Muhumuza, a senior lecturer of economics at Makerere University, was concerned that the budget did not adequately address the key issue of healthcare where understaffing, drug stock-outs and poor pay continue to hamper service delivery.

“For example, we are having an issue of [undeployed] medical interns, but you have allocated money to skilling yet people are dying in hospitals because of lack of the services of these interns. The government should have repurposed part of the skilling budget to solve this issue,” he said.

Finance Minister Matia Kasaija announced at the budget reading last Thursday that Shs22.6 billion has been allocated to cover arrears for specialist doctors and medical interns. Though well-received, critics pointed out that there was no mention of future funding for medical internships and the recruitment of thousands of medics to meet immediate needs.

World Bank senior economist, Mr Rachel Sebudde, observed that any budget cuts have to take into account what impact they will have.

“When we are speaking about cutting expenditure we should ask ourselves where exactly we are spending in vital sectors like health and education. We are also speaking about freezing the creation of new administrative units, which is good, but we also need to reduce the existing ones,” she said. 

Dr Sebudde recognised Uganda’s potential to become a regional food basket, but noted that not enough investment is going into agriculture.

“Are we supporting farmers to ensure mass production of quality products, enhancing productivity and access to high-quality agricultural inputs?” she asked.

Her concerns fed into Prof Augustine Nuwagaba’s conclusion that Uganda’s main budgeting problem is huge public debt resulting from the misplaced expenditure.

“The elephant in the room is debt [which stands at Shs86.6 trillion],” he said.

“Three questions must be answered where debt sustainability is concerned: Why do you borrow? Where do you borrow from? And, lastly, do you have the capacity to pay?,”  he added.

Debt financing will suck Shs17 trillion out of the budget, accounting for more than half of the Shs29.7 trillion in projected domestic revenue collections.

Prof Nuwagaba also advised the government to deliberately reduce the cost of doing business in the country in order to stimulate growth. Uganda operates a stifling tax regime under which businesses are forced to pay several different taxes.

Mr Julius Mukunda, the executive director of the Civil Society Budget Advocacy Group, said he is worried of the debt burden, adding that with Uganda owing local and foreign lenders in excess of Shs86 trillion, there could be a widespread institutionalised corruption in government.

“We want you to fix leakages and corruption, especially in areas of payroll… We want you to ensure that those implicated in corruption, their cases are disposed of quickly,” he said.

Govt options

Finance Ministry Permanent Secretary Ramathan Ggoobi parroted the view that once 39 percent of the population is brought into the money economy as projected in the Parish Development Model (PDM), the country will see robust growth next year.

At least Shs1.1 trillion was allocated out of the Shs52.7 trillion national budget to the PDM wealth creation initiative. By the end of 2023/2024, Mr Ggoobi said the country will be filled with rich Ugandans, he said.

“We are supporting the private sector to access affordable financing by investing Shs2.7 trillion to distant credit markets because commercial rates are so high to industrialise the economy. We are going to develop infrastructure in industrial parks including; electricity, roads, water, and ICT,” Mr Ggoobi, who is also Secretary to the Treasury, said.

He added: “We promise to tame expenditure, cut supplementary budgets and reduce borrowing, especially domestic borrowing to boost economic recovery.” 

Mr Ggoobi also said deliberate efforts will be made to boost revenue collections.

Govt priorities

• Effective implementation of PDM.

•           Upgrading infrastructure (roads, railway).

•           Promoting small scale solar-powered irrigation.

•           Science-based research and devt.

•           Investing in oil and gas sector.

•           Tourism.

•           ICT devt.

•           Human capital devt.

•           Collecting more revenue.

Experts priorities

•           Climate financing.

•           Enhancement in gender financing.

•           Prioritisation of agriculture.

•           Fiscal discipline.

•           Reducing domestic borrowing.

•           Fix leakages and corruption.

•           Expanding tax base. 

What they said

Priorities.

‘‘We are speaking about cutting expenditure but we should ask ourselves where exactly are we spending in vital sectors like health and education sectors? Are we having necessary requirements in hospitals or just infrastructures. We should look beyond the figure allocated,’’ Mr Rachel K. Sebudde, Senior Economist at the World Bank

PDM.

“This Budget has prioritised initiatives like effective implementation of the Parish Development Model to lift more Ugandans out of the subsistence economy. Emphasis has also been placed on building infrastructure in industrial parks,’’ Mr Henry Musasizi, the State Minister for General Duties

Climate finance.

‘‘Climate change manifests in different ways and if it finds the environment destroyed, it causes more harm. We estimate between $20 million and $30 million is being lost because of damages to the infrastructure, by 2025- it will have increased from $40 million to $150 million,’’ Mr Callist Tindimugay, Commissioner at the Water Ministry

Inflation.

“We are glad that inflation is going down, we want to fix leakages and corruption, especially in the areas of payroll; people are overpaid. We are glad that an audit is going on about the payroll,’’ Mr Julius Mukunda, the Executive Dictor of CSBAG

Borrowing.

‘‘Through domestic borrowing by the government, the private sector is being crowded out, it is only borrowing at only 20 percent. How can we make sure that the private sector borrowing at least reaches 30 percent?’’ Mr Fred Omach, the board chairperson of Uganda Debt Network                                                   

Infrastructure.

“We see the government borrowing to finance infrastructure yet they would be mobilising Ugandans in Diaspora to list the projects on stock exchange so that all Ugandans can hold shares and at the end, you come up with a big infrastructure at a low cost,’’ Prof Augustine Nuwagaba, policy analyst

Medical interns.

“We are having an issue of medical interns, but you [government] have allocated money to skilling young people yet patients are dying in hospitals because of lack of the services of these interns. The best thing the government had to do in such circumstance is to repurpose part of the skilling budget and solve this issue,’’ Mr Fred Muhumuza, economist

Statistics.

‘‘Let us factor in the issue of data and statistics. Who are the people in poverty benefiting from the PDM? How many are women? If we just continue rolling out programmes without [clearly]determining the beneficiaries [money will be lost],’’ Ms Flavia Kabahenda, the chairperson parliamentary Committee on Gender, Labour and Social Development

Mindset change.

‘‘The challenges youth face emanate from challenges they face as adolescents. In the budget, there’s less allocation towards community mobilisation and mindset change,’’ Mr Teopista Kizza, the head of programmes at African Youth Development Link

Corruption.

‘‘The government is moving towards tightening nuts on public officials on necessary expenditure which is good, but have we addressed the issue of corruption which they will use as an option,’’ Mr Francis Kabuye, the head of Policy at Federation of Small and Medium Enterprises

Investment.

‘‘This population should be fed. There is a need to define the basic investments in food nutrition. Over Shs2 trillion budgeted for the sector [Agriculture] might be utilised [so that we don’t] leave millions of Ugandans hungry,’’ Ms Agnes Kirabo, the executive director of Food Rights Alliance

Climate change.

‘‘Climate financing is still a problem as you saw recently the breakdown of Katonga brought this country to its knees and as I talk, western Uganda has been hit by drought. The Finance PS can explain why they reduced the [budget] on climate financing,’’ Mr Arthur Bainomugisha-Executive Director of ACODE