What you need to know:
- The proposal was made by the executive director of the NPA, Dr Joseph Muvawala, who was appearing before the Parliament’s Budget Committee to present the Authority’s position paper on Uganda’s Charter of Fiscal Responsibility.
Officials of the National Planning Authority (NPA) on Wednesday asked the government to halt the construction of new roads projects and focus on the revival of the economy that has been battered by Covid-19.
The proposal was made by the executive director of the NPA, Dr Joseph Muvawala, who was appearing before the Parliament’s Budget Committee to present the Authority’s position paper on Uganda’s Charter of Fiscal Responsibility.
The measure, if implemented, according to Dr Muvawala, would enable the government to plan for other sectors of the economy to grow.
“We aren’t saying reallocate resources from infrastructure, but we are saying we don’t have enough resources, therefore, implementing those projects that we started and completing them makes simple logic. You don’t touch a project, leave it and start another one without completing the other. We are advising government to concentrate on finishing what they started,” Dr Muvawala said.
The NPA boss told legislators on the budget committee that the government is short on funds required to implement its priorities as enlisted in various Ministries, Departments and Agencies (MDAs).
The proposal was backed by some lawmakers saying some of the major road projects have been bankrolled using borrowed money.
“What NPA is saying is that for us to achieve the fiscal rule of 49 percent debt to GDP ratio, we must cut down on debt, raise domestic revenue and avoid new projects that will allow us to go and borrow because if you go outside there and borrow money, the debt ceiling will continue to be blown,” the Otuke County lawmaker, Mr Peter Omara, said.
The Butambala County MP, Mr Muwanga Kivumbi, said the mere construction of roads doesn’t directly translate to economic development.
“If you are borrowing to create infrastructure of a lifespan of average of 15 to 20 years and your debt repayment schedule is going above 93 years for us to be able to pay, it may not make sense…,” Mr Kivumbi said.
The executive director of the Civil Society Budget Advocacy Group (CSBAG), Mr Julius Mukunda, said the matter would ably be settled by establishing a debt ceiling to contain government appetite for loans.
“In fact for us, we are proposing a debt ceiling on how much you can borrow. If you want to break it, come and seek permission first on why you want to break it and for what purpose…” Mr Mukunda said.
He also proposed the establishment of a fiscal council that will act as a new agency to oversee taxation and expenditure of public funds.
“The rules are okay, however, the implementation has got a very big challenge because we don’t have that mechanism in place. You need somebody outside the system independent to determine how the rules will be enforced and reported,” Mr Mukunda said.
It is important to note that within the Monetary Policy Report for the period ended August, the Bank of Uganda revealed that the stock of public debt had grown from approximately Shs65.83 trillion as of June 2020 to Shs70.3 trillion as of June 2021 representing an increase of Shs4.47 trillion.
The spokesperson at the Ministry of Works and Transport, Ms Suzan Kataike, said the proposal would need to be debated upon.
“Of course you know some of those projects are facilitated by both government and donors. So if the donors have already released their money, there is no way government can fail to release its part,” Ms Kataike said.