Govt revises budget estimates For FY 2024/25

by Christopher Kiiza
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The Ministry of Finance Planning and Economic Development has revised the budget estimates for the financial year 2024/25 upwards from 52.7 trillion shillings to 53.3 trillion shillings.

“The preliminary resource envelope for the financial year 2024/2025 issued in the first budget call circular amounted to Shs52.723 Trillion. This has since been revised upwards to Shs53.336 Trillion,” the second budget call circular on the finalisation of the budget for the financial year 2024/25 issued by the Ministry of Finance Permanent Secretary, Ramathan Ggoobi to all accounting officers reads in part.

Of the Shs53.336 trillion, Shs29.957 Trillion will be generated from domestic revenues; Shs311 Billion is budget support; 4.116 Trillion is domestic borrowing; Shs. 9.208 Trillion is project support; Shs9.455 Trillion is domestic debt refinancing; Shs. 287.1 billion is non-tax revenue.

The circular indicates that whereas the overall budget has increased, from Shs52.723 Trillion in FY 2023/24 to Shs53.336 Trillion in FY 2024/25, the discretionary resource has reduced by Shs3.469 Trillion from Shs25.205 Trillion to Shs21.736 Trillion, which has to be optimised through coordinated fiscal and monetary policies between the Ministry of Finance and Bank of Uganda.

In addition, Ggoobi informs the Accounting Officers that the Ministry of Finance recently undertook a baseline costing of all votes, and realized a shortfall of Shs. 4.934 trillion. 

“Accordingly, all Accounting Officers must ensure all the fixed costs take the first call as they finalize their budgets.”

Ggoobi urged the Accounting Officers to ensure that wage, fixed and statutory costs are fully provided for; operations and maintenance of infrastructure and other assets are budgeted for; and prioritize allocation to on-going Projects.

The Permanent Secretary further called on Accounting Officers to ensure that utilities including rent are fully provided for; prioritize allocation to investments that generate revenue; and plan and budget within the available resources to avoid virements and supplementary requests during execution.

Deepening Fiscal Consolidation  

In light of the current budgetary limitations and the imperative to manage debt and its associated servicing expenses, Ggoobi said the Ministry of Finance is undertaking fiscal consolidation measures. 

These efforts center on bolstering domestic revenue generation, enhancing the effectiveness of resource allocation, and curbing reliance on domestic borrowing.

According to Ggobbi, the following principles will remain upheld:

Provide and protect funding for key priorities namely: policy commitments and fixed costs (PDM, Emyooga, peace and security, human capital development, roads, electricity).

Support private sector development by maintaining financing to Uganda Development Corporation (UDC), Microfinance Support Centre, Agriculture Credit Facility among others.

Fast-tracking implementation of domestic revenue mobilisation strategy measures to raise more revenue.

Reduce pace of growth in debt over the medium term to minimize debt service costs and ensure debt sustainability.

Limited travel abroad.

Restrict new vehicle purchase to only hospital ambulances, medical supplies, agricultural extension, security and revenue mobilization.

Prioritize completion of critical on-going projects.

No new non-concessional projects shall commence except those already in the fiscal framework or those with no direct or indirect claim on the consolidated fund.

Although some of the above principles are very vital in cutting government expenditure and enhancing revenue mobilization strategies amidst budget constraint and need to control debt and its servicing costs, some members of the general public have questioned their successful implementation.

For instance, due to economic hardships and inadequate revenue generation, the government in June 2023 announced the suspension of foreign travel, limiting it solely to essential official duties in the 2023/24 financial year.

This was just one of the measures being taken by the government to reduce spending.

The Finance Minister, Matia Kasaija also announced that purchase of vehicles for political leaders had been suspended.

“In order to live within our means, we have reduced consumptive expenditure. During next financial year (2023/24), there will be no purchase of new vehicles for political leaders and public officers except for hospital ambulances, medical supplies or distribution, agricultural extension services, security and revenue mobilization,” said Kasaija while reading the budget for the 2023/24 financial year.

He added: “Travel abroad has also been restricted to statutory functions and for critical legal and resource mobilization functions. We will also regulate expenses on workshops and seminars.”

This, however, proved futile after the government sent a bloated 71-member delegation to the United Nations General Assembly in October 2023.

The delegation consisted of two teams, one led by Vice President Jessica Alupo and another team led by Prime Minister, Robinah Nabbanja.

This caused uproar among members of the general public who termed the development as “wastage of taxpayers’ money.”

Meanwhile, in an effort to tackle the escalating public debt crisis, government last year announced four fiscal consolidation measures aimed at managing and reducing the nation’s debt level.

They include; controlling and reducing borrowing; contract more concessional loans as opposed to commercial; enhance revenue mobilization through implementation of the domestic revenue mobilization strategy; and control and reduce government expenditure.

According to the latest Auditor General’s Report for the financial year ended 30th June 2023, the total public debt as at 30th June, 2023 stood at 96.168 trillion shillings, comprising of Domestic Debt Stock of 43.696 trillion (45.4%) and the External Debt Stock of 52.472 trillion (54.6%). This represents an increase of 9.329 trillion, equivalent to 10.74% compared to 86.839 trillion as at 30th June 2022.

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