Industry Insights

BUDGET: Uganda must curtail expenditure and exercise strictness

BY PAUL TENTENA

KAMPALA, UGANDA- The Government of Uganda needs to curtail expenditure and exercise austerity to ensure judicious utilization of public money, experts have said analyzing the recently read 2018/19 Uganda National Budget.

Ramathan Goobi an Economist, during the Institute of Certified Public Accountants of Uganda National Budget breakfast at Imperial Royale Hotel in Kampala noted that the cost of running Uganda Government has increased rapidly.

“Now, Wage bill = UGX 4.2tn; allowances = 745bn; travel = 421bn; Utilities = 169bn; fuel = 132bn; workshops =143bn; rent = 88bn; Vehicle Purchase = 80bn. With waning budget discipline, the

set priorities receive little money that cannot do much to cause the change needed,” said Goobi.

He said, that in ‘90s,  limited resources impeded Government from meeting set priorities but today,  it’s “absorption capacity” & corruption that account for budget failure.

“The budget strategy is in pursuit of macroeconomic health & growth recovery, as opposed to socioeconomic welfare of the citizens. We all need to bring attention of government to this unwelcome fact. We must compel government to pursue structural change,” he said.

Goobi said over the years, the budget has become a document containing promises, most of which people know will not be fulfilled and that’s why people no longer lose sleep over budget speech.

Uganda’s total National Budget is UGX 32.7 trillion. Although domestic sources will finance 76% of the Budget, the actual money to be raised from tax & non-tax sources will finance only 50% of the Budget. The rest(24%) is domestic debt.

“Debt roll-over (re-contracting the debt instead of paying it off) will cost us about UGX 10.3 trillion. Thus, the ‘true’ budget for 2018/19 [including discretionary, statutory & interest payment] is UGX 22.4tn,” noted Goobi.

For a 4th year in row, he said, the budget includes provisions for refinancing maturing domestic debt, to a tune of UGX 5.8tn (25% of the ‘true’ budget.

“With the estimated population of 40m, each Ugandan shares UGX 560,000 of the ‘true’ 2018/19 budget (or UGX 817,500 of the UGX 32.7 trillion). With a debt per capita of UGX 952,500, the net budget share for each Ugandan (babies inclusive) is a burden of UGX 392,500,” said Goobi.