What you need to know:
- Artistes and the privately-owned Dei Biopharm factory and Commonwealth Resort Munyonyo are among beneficiaries of a Shs3.5 trillion supplementary budget out of which State House and Office of the President have been allocated largest chunks.
- Permanent Secretary Ramathan Ggoobi, an outspoken advocate of frugality and budget discipline when a university lecturer and proponent of “a government that works” mantra, justified asking of new money five months into the 2023/24 financial year.
State House and the Office of the President have been allocated Shs311b, making them the largest individual recipients among government entities benefitting from Shs3.5t supplementary budget request.
The Shs285b apportioned to State House in two tranches is for “classified expenditure” while the Office of the President will spend Shs26b on Uganda’s preparations to host the Non-Aligned Movement (NAM) and the G77+China summits next January.
Heads of governments of member states, or their high-profile assignees, alongside several hundreds of foreign guests, are expected to converge in Kampala for deliberations to canvass common positions of developing countries on important global issues.
The venue for the back-to-back meetings is the Commonwealth Resort Munyonyo, a private facility on the shores of Lake Victoria owned by businessman Sudhir Ruparelia, and the government has in the supplementary request allocated Shs37b for completion of a convention centre there.
The original plan was for Uganda Development Corporation (UDC), a parastatal, to extend a credit facility to the businessman to bankroll construction of the convention centre, but open-ended conversation among stakeholders has left it unclear whether any financial contribution would be a government equity or loan.
Mr Henry Musasizi, the state minister of Finance (General Duties), presented the Shs3.5t supplementary budget request to Parliament on November 30, but the details remained under wraps until yesterday.
No spending specifics have been provided for the allocation to the Office of the President, a ministry supporting the President in execution of execute executive functions, while categorisation of the Shs285b to State House, the combined office and residence of the President, as “classified expenditure” largely removes the expenses from parliamentary scrutiny.
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A supplementary request is money asked in excess of a running budget within a financial year to meet unforeseen expenses, although the new request the government has tabled comprise known expenditures, among them, salaries, ongoing engineering works, food and other recurrent expenditures.
Permanent Secretary Ramathan Ggoobi, an outspoken advocate of frugality and budget discipline when a university lecturer and proponent of “a government that works” mantra, justified asking of new money five months into the 2023/24 financial year.
He noted that government plans to raise money for the supplementary spending by borrowing Shs3.6t domestically, an approach experts warned risked crowding the private sector out of credit, increasing interest rates on loans and borders on budget law non-compliance.
“… a supplementary expenditure should be something unavoidable, unpredictable and un-absorbable. None of these [new] expenditures qualify so,” Mr Julius Mukunda, the executive director of the Civil Society Budget Advocacy Group (CSBAG), said.
He added: “If I was Parliament and [I] was following the law, I would throw that supplementary request out and not consider it and if the government has already spent money, I would consider it a loss.”
Member of Parliament Muwanga Kivumbi (Butambala; NUP), the shadow minister of Finance, expressed similar reservations, arguing that whereas the Public Finance Management Act empowers the government to spend up to 3 percent equivalent of a financial year’s budget in supplementary allocations and only notify the Legislature, the current allocations are inappropriate.
“What need [arose] for justification for the supplementary budget … [such expenditures] should have been unforeseeable at the time of budgeting, or an item that cannot be postponed for next year’s budgeting process,” he told this newspaper by telephone.
He added: “What kind of planning does this government exercise to spend money within three percent by the month of July [onset of a new financial year] … this means the government distorts the budget and reorients the budget from day one.”
Finance ministry spokesperson, Mr Jim Mugunga, last night said that PS Ggoobi, who doubles as the secretary to the Treasury, and their top leadership have “zero tolerance to abuse of supplementary options”.
The exceptions made in this case, he said, were “pre-commitments where funds were spent”.
“It is a [legal] requirement to regularise them … Going forward, I see no such incidents easily allowed to happen.”
The planned Shs3.5t borrowing adds to the Shs86.8t the country owes to both external and internal lenders, dragging Uganda whose debt to Gross Domestic Product (GDP) ratio stood at 46.2 percent by June 2023, closer to the 50 percent threshold redline.
In the supplementary budget, Shs2.7b has been allocated for “supervision of Lubowa Hospital”, a planned specialist children’s health facility on which the government has spent in excess of Shs400b without a wall going up.
Our Reporter Tonny Abet, who in September visited the construction site to ascertain the status of the construction bankrolled with tax payers’ money, was instead arrested on the orders of the site manager and eventually detained overnight at a police station after he found evidence of stalled works.
This notwithstanding, Health ministry Spokesperson Emmanuel Ainebyoona said the “scheduled project” is alive and they are seeking Shs2.7b for eight engineers and architects to supervise the works and report to the ministry’s steering committee for onward information of an inter-ministerial committee.
“The discussion on whether to allocate money is not really on our side, but rather to ensure that the project that was started is executed and … the request for the funds is for supervising the project. So, it is up to the Parliament to decide whether to allocate the money or not,” he said.
Other allocations in the supplementary request include Shs13b to capitalize and build structures for a saving and credit society (Sacco) for Ugandan artistes, Shs54b to reinstate non-wage police budget that Parliament slashed “inadvertently” and Shs94b to cover shortfalls in salaries for secondary school teachers.
The Internal Security Organisation, the domestic spy agency, has been allocated Shs16b to track the implementation of wealth creation programmes and another Shs39.3b to buy a “classified security equipment”.
The government has provision Shs2b to renovate the National Mosque, formerly Gaddafi Mosque, in Old Kampala. Mr Aggrey Kibenge, the permanent secretary at the Ministry of Gender, Labour and Social Development, said the government is picking the renovation bills of the mosque, where Uganda Muslim Supreme Council is headquartered, in fulfilment of a presidential pledge.
“ … because religious institutions including the Inter-Religious Council [of Uganda] are financed through the Ministry of Gender, that money [for refurbishment of the National Mosque] was simply remitted through the Gender ministry. So, it is not new money they are asking for,” he noted.
Church of Uganda has been budgeted Shs10b through Uganda Land Commission for its land at Makerere University’s College of Veterinary Medicine, Animal Resources and Bio-Security.
Shs79b has been allocated to feed prisoners, Shs26b for allowances and arrears for medical interns, and Shs14b to reinstate the students’ loan scheme, formally called the Higher Students Financing Board --- a facility the government intended to end over cash flow problems.
Uganda Cancer Institute and Uganda Heart Institute have been allocated Shs30b and Shs8b, respectively, for procurement of classified oncology equipment and replacement of obsolete cardiac catherisation laboratory.
The government has assigned Shs70b in additional funding for ongoing construction of Kabalega International Airport in Hoima City in mid-western Uganda, the hub for Uganda’s nascent oil find whose extraction is planned to start at the earliest in 2025.
Swiss multinational company, SGS, is getting Shs33b in compensation for its cancelled vehicle pre-shipment inspection.
Another allocation in the supplementary request is Shs166.5m the government says was spent to repatriate the remains of Muhammad Kisambira, then Uganda’s ambassador to Iran who died in Tehran in August.
Dei Biopharma Factory north of Kampala, previously reported to be seeking financial bailout from the government, have been allocated Shs74b out of the Shs178b for research and development under the Ministry of Science, Technology and Innovation.
The National Identification Registration Authority (NIRA) is to get Shs138b to buy new national security information system while Shs5b has been allocation to compensate the Kabaka of Buganda and Tooro kingdom for their lands and Bunyoro kingdom.
Finance ministry indicated in the supplementary budget request document that it opted for domestic borrowing because external finance, at 10 percent interest per annum in foreign currency, is costly and neither was it possible to mobilise additional tax revenue within a short time to meet urgent spending needs.
It, however, committed to reduce the frequency and magnitude of unplanned supplementary expenditures under its goals to cut down debt servicing costs, which is consuming Shs6 trillion out of the 2023/24 financial year budget.
The ministry’s three-point solution to the budget headache include increasing domestic revenues, reducing borrowing while improving allocative efficiency and repurposing some budgeted activities to accommodate interest payment.