Parliament has passed the Budget Framework Paper worth Shs 49.98 trillion for the next financial year 2023/2024.
This is in line with the Public Finance Management Act, 2015 which sets February 1 as the deadline for the House to approve the framework.
It was approved yesterday Tuesday during the plenary sitting chaired by deputy speaker of parliament, Thomas Tayebwa. It followed a debate by MPs on the budget committee report and a minority report authored by shadow minister of Finance Muhammad Muwanga Kivumbi.
The proposed Shs 49.98 trillion national budget will be financed through domestic revenue equivalent to Shs 28.83 trillion, budget support amounting to Shs 2.491 trillion, domestic borrowing Shs 1.585 trillion, external project support worth Shs 8.04 trillion, domestic refinancing of Shs 8.798 trillion, and local revenue for local government (AIA) of Shs 238.5 billion.
While the budget is set to increase by Shs 1.8 trillion from the current financial year 2022/2023 budget of Shs 48.1 trillion, discretionary expenditures – which is money that can be spent by different sectors. However, this will reduce by Shs 2.5 trillion due to the increase in the budget for interest and debt payment which has risen to Shs 19 trillion from Shs 16 trillion.
The budget theme has been maintained as “Full Monetization of the Ugandan Economy through Commercial Agriculture, Industrialization, Expanding and Broadening Services, Digital Transformation and Market Access.”
Government’s key priorities include the construction of the Standard Gauge Railway and finalization of the rehabilitation of the Meter Gauge Railway under the Integrated Transport programme (Shs 4.65 trillion); investing in small-scale solar-powered irrigation as well as addressing climate change and food security under Agro Industrialization Programme (Shs 1.499 trillion) and others.
The other priorities are constructing power service stations and transmission lines under the Sustainable Energy Development programme (Shs 1.2 trillion) and capitalization of Uganda Development Bank (UDB) and Uganda Development Corporation (UDC) to continue supporting private sector development, recovery and economic transformation under the Private Sector Development (Shs 1.798 trillion).
According to the sector allocations, the Human Capital Development program which includes education, health, gender and social development has been planned to receive Shs 9.005 trillion, an allocation lower than that of Shs 9.089 trillion in the current financial year budget of 2022/2023.
Although it remains the highest-funded programme in the budget, the proposed allocation implies an overall reduction of Shs 83.94 billion. On the other hand, governance and security programme is proposed to receive Shs 6.8 trillion, lower than the current financial year budget of Shs 7.2 trillion.
The sector is composed of different government entities responsible for ensuring security, maintenance of law and order, public policy governance, accountability, administration of justice and others. The Integrated Transport Infrastructure and Services is proposed to receive Shs 4.65 trillion up from the Shs 4.3 trillion allocated in the current financial year.
The other programmes are Energy and Mineral Development Sector Shs 1.8 trillion, Private Sector Development Programme Shs 1.79 trillion, manufacturing Shs 268.4 billion, Natural Resources, Environment, Climate Change, Land and Water programme Shs 547.3 billion, Shs 89.3 billion Tourism, Digital Transformation Programme Shs 176.7 billion and others.
Some of the funds through which government is channelling resources for wealth creation are Shs 872.6 billion for the eight poorest sub regions including Karamoja, Teso, Bukedi, Bugisu, Busoga, Acholi, Bunyoro, and West Nile, exporters fund, Shs 740 billion, Parish Development Model (PDM) Shs 105 billion, Emyooga Shs 100 billion, Small Business Recovery Fund Shs 200 billion, and others.
During debate, Kashonzi County MP Herbert Tayebwa warned against the high expenditure of government yet the country’s revenue remains low. He said that Uganda should only borrow for investment but not consumptive expenditures.
The leader of opposition, Mathias Mpuuga said that the budget framework paper is silent on the high-interest rates on loans. He wondered how much the country was paying annually as debt repayment for the Karuma hydropower dam and who was responsible for its repair.
Sarah Opendi, the Tororo Woman MP said that government needs to put more emphasis on factors negatively impacting the tourism sector like the poor infrastructure. The deputy speaker Tayebwa expressed concern about reducing discretionary expenditure despite the growth in revenue estimates.
“This means that we shall have limitations in using our appropriation power to reallocate the budget. For every Shs 100 collected, over Shs 37 is spent on servicing debts,” said Tayebwa.
MPs also appealed to government to allocate more money to productive sectors. In its report presented by the vice chairperson Wamakuyu Mudimi, the budget committee said that proposed budgets towards programmes that contribute directly to value addition is only 5.6 per cent of the total budget and only 4.7 per cent of the total budget has been allocated to programmes that contribute towards strengthening of the capacity of the private sector.
The budget committee report was approved with a recommendation for additional funds to different sectors of up to Shs 6.1 trillion. Government will now revise the budget estimates based on parliament’s recommendations and present final estimates to the House by 15th March for the final budgeting process that runs up to May when the final national budget is passed.
