Stay true to Budget commitment, govt told
Mr Fred Jacan Omach, the board chairperson of Uganda Debt Network. Photo | File
What you need to know:
- Up to Shs17 trillion of the total Shs52.7 trillion budget has been allocated to repayment of debts -- which have increased to Shs86.6 trillion as of June 30, 2022, compared to Shs75.1 trillion in the previous year
The government has been asked to stay true to its budget day commitment to stop unnecessary borrowing if the country is to have any hope of maintaining public debt at sustainable levels.
Up to Shs17 trillion of the total Shs52.7 trillion budget has been allocated to repayment of debts -- which have increased to Shs86.6 trillion as of June 30, 2022, compared to Shs75.1 trillion in the previous year.
Of this, Shs38.1 trillion is locally contracted debt, while Shs48.5 trillion is owed to foreign bilateral and multilateral lenders.
Speaking at a Monday post-budget conference in Kampala, the former State minister for Finance, Mr Fred Jacan Omach, asked the government to revise its expenditure targets and also ensure that it finances the budget within planned means.
The former minister who is now a board chair of the Uganda Debt Network, a non-governmental public policy advocacy organisation, raised the red flag on debt.
Tax exemptions
“Can we do something about debt servicing which is extremely high? We are going to spend more than 50 percent of what we are going to collect here on debt financing. Let’s revise the tax exemptions we are giving to investors,” he said
The government was asked to pay more attention on revenue mobilisation in order to be able to finance the budget more from local resources.
URA target
The Uganda Revenue Authority had by May collected Shs21 trillion against a set annual target of Shs25 trillion. It faces an uphill task to collect the remaining amount with eight days left to the close of the 2022/2023 Financial Year.
Over the years, Uganda’s tax to GDP ratio has stagnated at 13 percent in the last 25 years, a figure which last week drew criticism from the President. The tax to GDP ratio compares overall taxes collected to the size of the economy.
President Museveni expressed his unhappiness with the tax body for not doing enough to expand its tax revenue catchment area.
Mr Omach said the tax to GDP ratio should ideally be increased to at least 18 percent.
“Even with innovations, the money collected by URA is little. What this country needs is a wider tax base through creation of more businesses. Alternatively, the government can raise money through establishment of diaspora bonds that have been adopted by countries like Nigeria,” he said.
