The Government has commenced the budget approval process for the financial year 2024/2025 by tabling before Parliament the budget estimates of the National Budget Framework Paper amounting to Shs52.7 trillion.
The budget framework paper was tabled before the House on Wednesday by the Minister of State for Finance in charge of General Duties, Henry Musasizi.
Musasizi informed the House that Government plans to finance the estimated 52.7 trillion shillings’ budget for FY2024/25 by improving revenue collections and controlling borrowing to reduce debt servicing costs while supporting faster socio-economic transformation, among others.
The estimated budget for the 2024/25 financial year shows that the resource envelope will decrease slightly by 14 billion shillings from the current 52.7 trillion shillings of 2023/24 financial year which has since increased to 56.2 trillion shillings following the approval of supplementary budget of 3.5 trillion shillings by parliament last week.
Government plans to mobilize 29.9 trillion shillings in domestic revenue next financial year. This is slightly higher than the current target 29.6 trillion shillings.
The Uganda Revenue Authority (URA) will be tasked to collect 27.7 trillion shillings (93%) of the domestic revenue.
This is lower than the 29.7 trillion shillings which URA is tasked to collect for the 2023/24 financial year, of which 27.4 trillion will be tax revenue, and 2.3 trillion will be Non-Tax Revenue.
Financing of the planned 52.7 trillion shillings’ budget for FY2024/25 will see the government borrow up to 13 trillion shillings, with 8.9 trillion being from external lenders and balance through domestic borrowing, and domestic refinancing of 9.4 trillion shillings.
The actual amount of the planned budget to be available for spending from the resource envelope is 21 trillion shillings as the balance shall be channeled towards debt payment, interest, arrears and domestic refinancing.
Similarly, 17 trillion shillings of the 52.7 trillion shillings’ budget for the 2023/24 financial year was allocated for debt repayment.
The Government predicts that public debt will drop to below 50% though it is expected to increase in the course of this financial year with real stock of the debt standing at 86.7 trillion shillings as of June 2023.
Musasizi informed lawmakers that the priority areas in 2024/2025 financial year will include; investing in people, roads, peace and security, electricity generation and transmission lines, and effective management of natural disasters.
“The theme of the budget for financial year 2024/2025 remains the same as financial year 2023/2024 which is full monetization of Uganda’s economy through commercial agriculture, industralisation, expanding and broadening services, digital transformation and market access,” he said.
Leader of the Opposition, Mathias Mpuuga said that the Minister ought to have laid the Charter for Fiscal Responsibility, to capture changes made in the 2024/2025 budget.
“The minister has been elaborate on what they intend to change, what he’s not spoken about including matters obtained from the Charter of Fiscal Responsibility. The Minister is not clear whether they intend to make some changes to the Charter of Fiscal Responsibility because if that be the case, he should have laid it here with the BFP (Budget Framework Paper,” said Mpuuga.
Musasizi in response said that the Charter for Fiscal Responsibility runs for a five-year period, and it was approved in 2021 which will cater for the next financial year.
Government has severally said that it remains committed to maintaining fiscal sustainability, consistent with the requirements of the Charter for Fiscal Responsibility.
The Charters for Fiscal Responsibility are important tools that governments can use to improve their financial management and deliver better outcomes for their citizens.
Some of the key principles of fiscal responsibility include: sufficiency in revenue mobilization which compels government to collect enough revenue to finance its programs and services; prudent and sustainable levels of public debt which guide governments to borrow money responsibly and keep their debt levels under control, sustainable fiscal balance which ensure that government’s budget is balanced over the medium term, meaning that it should not spend more money than it takes in over a period of several years.
The Secretary to the Treasury, Ramathan Ggoobi recently said the government of Uganda’s Charter for Fiscal Responsibility will be realized through the implementation of the Government’s fiscal consolidation strategy that is hinged on; increasing domestic revenue by at least 0.5 percentage points of GDP through implementation of the Domestic Revenue Mobilization Strategy; realigning expenditure from nonpriority to high-priority areas, and reducing reliance on domestic and foreign borrowing.
State Of The Economy
The picture of the economy as highlighted in the budget framework paper shows that by November 2023, inflation stood at 2.3% which is much lower 10% recorded in November 2022.
“Inflation is expected to remain within the policy target of 5% over the medium term,” said Musasizi.
Uganda has the lowest inflation rate among all the eight East African regional countries.
Exports registered a 54% increase in the twelve months ended October 2023, generating USD 6,497 million, a substantial increase from the USD 4,194 million reported in October 2022.
The exports were driven by gold, coffee, and maize, with the East African Community being the major destination, and with Kenya coming on top, followed by DRC and South Sudan.
Despite the positive figures, imports from Kenya and Tanzania are of higher value than the exported.
“The increase in imports is largely in the oil and gas sector, mineral exploration, vehicles and accessories,” Musasizi said.
Speaker, Anita Among referred the budget framework paper (BFP) to the Budget Committee for consideration and to various sectoral committees, which she said will restrict themselves to the part of the BFP that falls within their jurisdictions.
“The consideration of the BFP usually coincides with the festive season. As such, the Chairpersons of various committees should adequately mobilise and make sure this work is done as early as possible,” she said.