The Government has released 9.195 trillion shillings for expenditures for the second quarter of the financial year 2023/24.
While releasing the government quarter two expenditures for the 2023/24 financial year which began on July 1, 2023, the Finance Ministry Permanent Secretary and Secretary to the Treasury, Ramathan Ggoobi said 1.842 trillion which represents 25.3% will go towards wages while 529.7 billion shillings is for the Parish Development Model.
Shs 434.01 billion has been released for operations of security institutions i.e., Ministry of Defence (Ushs 217.868 billion), Police (Ushs 78.121 billion), Prisons (Ushs 91.7 billion) ISO and ESO (Ushs 46.313 billion).
Shs 420 billion has been released for statutory votes i.e Parliament (Ushs 212.708 billion), Electoral Commission (Ushs 97.057 billion of which Ushs 58 billion is to enable the conducting merged election for Women Council and election of Administrative Units LC Is & IIs), Judiciary (Ushs 60.28 billion) e.t.c
Shs 289.558 billion has been released for pension and gratuity. This includes the requirement for pension and gratuity for Local Governments.
Shs 221 billion has been provided to Education Institutions including Ministry of Education and Sports (Ushs 84.3 billion to cater to instructional materials, students loan scheme and examination bodies), Public Universities, UMI and LDC (Ushs 108 billion), UNEB (Ushs 23.34 billion) for supervising, conducting and managing exams, National Curriculum Development Centre (NCDC) -5 billion.
Shs 240.303 billion has been provided to National Medical Stores to meet the obligations for purchase of essential drugs and medicines.
Shs 158.043 billion has been provided to the Uganda Bureau of Statistics (UBOS) to conduct the National Census activities.
Shs 156.19 billion has been provided to Uganda Road Fund for Road maintenance especially to cater for roads which are affected by seasonal rains.
Shs 57.274 billion has been provided to agriculture institutions to cater for the planting season under NAADs and UCDA, research under NARO among others.
Shs 21 billion has been provided for operations of the National Airline while 15 billion has been provided for support to Sports federations under the National Council of Sports.
6.3T COLLECTED IN FIRST QUARTER OF FY 2023/24; ECONOMY TO GROW AT 6%.
Ggoobi said that government 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.
According to Ggoobi, 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.
Ggoobi said that 6.3 trillion shillings was collected during the first quarter of 2023/24 financial year.
“At the end of September 2023, the cumulative domestic revenue collections for this financial year were sh6.327 Trillion,” he said.
This represents a 16.5% growth compared to the same period of the last financial year. The growth is higher than the average growth in revenue collections of 15% for the last three financial years.
Ggoobi said government targets to grow domestic revenue collections by at least 0.5 percentage points of GDP for FY2023/24.
The fiscal strategy for the 2023/24 financial year is to prioritize the enhancement of revenue collection, the rationalization of public expenditure and ensuring long term debt sustainability
The Uganda Revenue Authority (URA) is projected to collect 29.7 trillion shillings for the 2023/24 financial year, of which 27.4 trillion will be tax revenue and 2.3 trillion will be Non-Tax Revenue.
“Given our fiscal consolidation strategy, public debt as a percentage of GDP has been reducing. Public debt to GDP ratio was projected to be 47.1% as of June 2023 which is a reduction from 48.4% at June 2022,” said Ggoobi.
“Additionally, debt service obligations will reduce in the subsequent financial years, implying a reduction in the amount of our revenue used to service debt and thereby creating fiscal space to accommodate expenditure on more productive areas,” he added.
Uganda’s budget for the 2023/24 financial year is 52.7 trillion shillings. This jumped by 4.6 trillion up from 48.1 trillion shillings for the 2022/23 financial year.
Of the 52.7 trillion, a whopping 17 trillion shillings was budgeted for debt repayment, taking the biggest chunk of the budget for this financial year.
Meanwhile, Ggoobi said the economy remains on a steady recovery path, noting that it is expected to expand by 6% this financial year, up from 5.3% in financial year 2022/23 which was also higher than the 4.6% growth rate registered in financial year 2021/22.
“With continued effective implementation of Government programs and private sector recovery, the economy is expected to expand by 6.0% this financial year (FY 2023/24). It is projected that aggregate demand and production will continue to recover mainly due to a continued decline in inflation, and increased activity in the oil and gas sector, which should boost employment as well as other sectors of the economy,” he said.
He added: “The high-frequency indicators of economic activity show that there has been improvement in economic activity in the first quarter of financial year 2023/24. The Composite Index of Economic Activity (CIEA), which measures the volume of overall business activities, has been on an upward trajectory since April 2023, increasing to 162.63 in August 2023. This shows that business activity is growing.”
Inflation has continued to ease, with headline inflation declining to 2.7% in September 2023 from a peak of 10.7% in October 2022.
This, according to Ggoobi, is on account of the reduction in fuel and some food prices, easing global supply chain constraints, the coordination of the fiscal and monetary policy undertaken by the government, and a stable exchange rate.
Currently, Uganda has the lowest inflation in the region.