No worries about budget financing- Ggoobi tells Ugandans

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No worries about budget financing- Ggoobi tells Ugandans
Ministry of Finance PS, Ramathan Goobi shares a light moment with PSFU's Sarah Kagingo and Absa MD, Mumba Kalifungwa.

The Ministry of Finance Permanent Secretary and Secretary to the Treasury, Ramathan Ggoobi has allayed fears by Ugandans in regards the financing of the 2024/ 25 financial year budget.

Next financial year’s budget has increased from shs52.7 trillion to shs72 trillion raising fears among the public on its financing.

Speaking during the post budget dialogue organised by Absa Bank Uganda at Kampala Serena Hotel, the Secretary to the Treasury said there is nothing to worry about.

“The budget will largely be financed by Ugandans through the taxes they pay.  For the past two years, there was no time we have failed to collect the revenue we set out to collect and yet it has been a difficult period,” Ggoobi said.

He explained that Ugandans, through revenue will contribute shs32 trillion of the shs72 trillion.

“The first  major source of money to finance our budget is revenue. Uganda’s budget is financed primarily by Ugandans. Therefore, Ugandan will pay shs29.4 trillion in tax and shs2.6 trillion from non- tax. When you go through the airport , on that ticket you have paid, there is some money which goes to Civil Aviation and that is tax to finance the budget,” Ggoobi said.

According to Ggoobi, the budget will also be financed through loans and grants to a tune of shs1.4 trillion while domestic borrowing will be at a tune of shs9 trillion.

The Finance Permanent Secretary again allayed fears of Ugandans on domestic borrowing, noting that it will be done carefully.

“We don’t just look in the roof and borrow, but we first model to see how much we have in domestic market. The banks have about shs27 trillion. Of this, we shall borrow only shs9 trillion. The banks  sit on mountains of money and if we don’t enter that market( through domestic borrowing), our financial sector would be in trouble. We therefore take money that would be of excess.”

According to Ggoobi, the petroleum fund drawdown will contribute shs1.4 trillion which will strictly go towards infrastructure development, while local governments will contribute shs294 billion through their revenue collections.

“We are going to borrow externally for projects at a tune of shs 9.6 trillion and of this, 2.8 trillion will be grants. Therefore, Shs52 trillion of the budget will  be financed through those sources.”

“ The remaining 20 trillion  will be through issuing bonds to Bank of Uganda to settle all government obligations as at June, 30 this year.”

The permanent secretary however emphasized being frugal by government.

The post budget dialogue was held under the theme, “Implications of the national budget with a focus on the private sector.”

Speaking during the function, Absa Uganda Managing Director,  Mumba Kalifungwa hailed government for  its commitment to driving economic growth and fostering an environment that supports sustainable development.

He said the  2024/25 budget has outlined several key areas that we believe will significantly contribute to our nation's progress.

“One of the central themes of this budget is the emphasis on agro-industrialization. Agriculture remains the backbone of our economy, providing livelihoods for millions of Ugandans. The budget's allocation towards modernizing agriculture, improving access to markets, and enhancing value addition is commendable,” Mumba said.

The Absa Bank Managing Director hailed government for priorities aligned towards stimulating private sector growth through initiatives including the shs175 billion for SMEs in the manufacturing and export sectors through the Investment for Industrial Transformation and Employment (INVITE) programme.

“We also thank government for the 50 billion allocated to capitalization of the agriculture credit facility to support farmers but mainly agro-processors that focus on value addition but also the capitalization of Uganda Development Bank with shs85 billion to support key sectors including agriculture, tourism and manufacturing to boost local production of essential goods to achieve import substitution,” Mumba noted.

He said that allocation of resources by government towards energy, oil, and gas development  will create new job opportunities, and stimulate economic growth with key projects including EACOP, expanding grid access and connectivity, powering industrial parks, and enhanced rural electrification.

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