The government says they anticipate a Shs200billion loss by the end of the 42-day-lockdown period.
The revelation was made by the Minister of State for Finance, Planning and Economic Development, Henry Musasizi.
Musasazi said that the lockdown imposed by President Museveni has a heavy impact on the economy which is sustained mostly by the formal sector.
“The 42 days have an impact of the course on the economy, we aspect a loss of revenue and actually project a loss of Shs200billion while financing emerging pressures,” Musasizi said.
He said the situation could even get worse if nothing changes between the 42 days and the end of the fiscal year in June 2022.
Accordingly, the government will lose at least Shs2 trillion in revenue and financing emerging pressures should there be no change in the COVID-19 situation.
On how the country finds itself in such a financial situation, Musasizi stated that the government did not envisage a future need for medical oxygen to the tune of the current demand.
“We did not envisage a situation where we would need to the tune at which it is being demanded now or even the need to recruit more health workers. All these go towards financing emerging pressures,” he said.
Musasizi stated that despite the continued role of the Uganda Revenue Authority in collecting tax including the recently instituted internet tax, it is only a long-term role yet the matters that need financing are emergencies.
“URA raises money slowly at a determined pace, however, some things must be financed immediately and we can not wait for URA, that is why we resort to borrowing which is not bad,” he said.
“Besides, our economy is hinged on the informal sector which does not pay tax, our tax comes from the formal sectors like UMA (Uganda Manufacturers Association),” he added.
What about the IMF loan
Musasizi reiterated that the Shs3.5trillion loan approved by the International Monitory Fund was not necessarily for COVID-19 but to help the country stabilize the economy over a 36-month period.
He said the money was long approved by the 10th parliament contrary to reports that it has been issued recently.
“This just the disbursement, this loan was approved sometime back by the 10th parliament. I want to clarify this to those misinformed about the loan. It is not for COVID-19 but to help sustain the economy and you will see this happen towards the end of the 3-year period,” Musasizi said.
He allayed fears from Ugandans regarding the indebtedness of the country to external funders.
“Hitting the mark (of borrowing) doesn’t mean we will stop borrowing. We will do it cautiously,” he said.
How is the government helping in the COVID-19 situation?
The Minister urged that government has played its role of resource allocation to help in the fight against COVID, calling upon people to take on the mantle.
There is a general perception that the government is not doing anything as far as COVID19 is concerned. Government appropriated funds,” he said.
As we generate ideas on how to deal with the situation, we need to look at the role of government, is it playing its role? The government’s role is to appropriate funds, enforce SOPs and sustain advocacy, you also have a role, if the government says no parties and you continue, you should be blamed.