By Hakim Wampamba
In the face of a struggling economy, there are fears that the shillings 50.7 trillion budget will be hard to fund given the low levels of domestic revenue, and the ban on borrowing in the short to medium term.
According to Dr. Fred Muhumuza, some of the directives issued by the Permanent Secretary to the Min of Finance Ramathan Ggoobi in the second budget circular will likely harm the budget as some priorities like the Parish Development model are underfunded.
In the second call to the budget circular the Permanent Secretary Ministry of Finance Ramathan Ggoobi said that
the economy is projected to grow at between 6% and 7% in the financial year 2023/2024 up from 5.3% in the current financial year 2022/2023.
The preliminary resource envelope FY 2023/24 has been adjusted upwards to 50.871trillion from 47.328trillion in FY 2022/23.
The will be no new borrowing next FY and this shall continue over the short to medium term. No entity shall receive an increase in the budget.
Travel abroad shall be restricted to only three Arms of Government. Salary enhancement suspended by one year. Vehicle purchase frozen in FY 2023/24.
Parish Development Model allocation of 1.059 trillion maintained in the budget for 2023/2024.
Dr. Fred Muhumuza, a senior economist at Makerere University, says that the adjustment of the preliminary resource envelope is punching way above the country's weight since the economy is not out of the woods yet. He argues that the government does not have enough fiscal space to spend on projects like the Standard Gauge Railway that do not have an immediate return on investment.
“For an economy like Uganda’s right now needs an investment that acts as a thrust. Projects like the SGR will take long to bring any returns that the facilitate recovery”
While restricting on travels abroad is welcome to the economists, as it saves on the over one trillion shillings spent every year on foreign travel, as well as restriction on purchase of government vehicles again saving government another one trillion shillings, he is worried about enhancement of salaries for civil servants
Muhumuza observes, “The interns are on strike always for their payments, the senior doctors too will strike like the teachers of Arts subjects do. So, in the end service delivery will be negatively affected and we will not achieve the target.”
Since the Ugandan public debt has been ballooning up to shillings 70 trillion, Muhumuza says that the ban on borrowing in the short medium term is a welcome move.
On the latest poverty alleviation blue print of government, the Parish Development model, he insists that the allocation of a trillion shillings is too little to fund all its seven pillars
“There are seven pillars of financial inclusion, infrastructure, among others one trillion is too little to fund the seven and in the end, we shall be moving in circles “
As the second call of the budget circular guides the different accounting officers of the government MDAs, the Minister of finance, is expected to read the 50. 8 trillion shillings budget for the year 2023/2024 in June this year.
