Parliament’s Budget Committee has questioned Finance Ministry officials on the set priorities for next financial year without increase in the budget allocations.
This was during the Monday meeting in which Henry Musasizi, the Minister of State for Finance presented the budget estimates for the coming financial year 2023/2024. Musasizi was in the company of the Secretary to Treasury, Ramathan Ggoobi and other Ministry officials.
In his statement, Musasizi said that the budget is prepared in a challenging environment occasioned by global and national shocks which include high inflation, tightening financial conditions in most regions, Russia-Ukraine Conflict, and the lingering negative effects of the COVID-19 pandemic.
He said that these shocks have led to rising interest rates, imported inflation, capital outflows from developing markets to developed markets such as North America and Europe, slower than the projected economic growth and lower export demand.
Musasizi told the committee that these challenges have resulted into a rise of public debt and its servicing costs and that to adapt to this environment, the projected discretionary resource envelope for the next financial Year budget has reduced by 2.54 trillion from 25.402 trillion in the current financial year 2022/2023 to 22.86 trillion.
With the reduced resource envelope, Musasizi said that the government has provided for key priorities including starting the construction of the Standard Gauge Railway and finalization of the rehabilitation of the Meter Gauge Railway under the Integrated Transport programme (4.65 trillion); investing in small-scale solar powered irrigation as well as addressing climate change and food security under Agro Industrialization Programme (1.499 trillion) and others.
The other priorities are constructing power service stations and transmission lines under the Sustainable Energy Development programme (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 (1.798 trillion).
The set government priorities raised questions from a section of MPs led by Dr. Emmanuel Otaala, who said that the proposed priority areas were giving false hope since some of their budgets have instead been reduced.
“The Minister articulated priority areas for the budget and item number three which is on the sustainable energy programme which I oversee as one of the priority areas but also item number nine, oil and gas development is a priority,” said that chairperson of parliament’s committee on Natural Resources. “This gave me a false relief because the impression that I got is that if these are priority areas, then of necessity, they have received some kind of budget enhancement.”
He said that the budget for Sustainable Energy Programme is proposed to reduce to 1.2 trillion Shillings compared to the 1.5 trillion allocated in the current financial year 2022/2023.
Otaala also noted that the Oil and Gas development budget is proposed to reduce from 869 billion to 539 billion Shillings.
Patrick Isiagi, the Budget Committee chairperson said there was no logic in the figures proposed by the Ministry of Finance in regard to the set priorities.
Prof. Elijah Mushemeza, the Sheema South MP also punched holes in the proposed priority areas by the government, saying that failure to prioritise tourism is a big gap in the budget.
“Given our historical experience before Covid-19, it is tourism that would bring in money very quickly. Apart from Oil and Gas development, the other priorities are geared to expenditure,” said Mushemeza.
Government has proposed a budget allocation of 89.29 billion for tourism a reduction from the current budget allocation of 194.67 billion.
Mushemeza questioned to continued decrease of the tourism sector budget and suggested that government prioritises some projects in tourism by investing more funds and in turn generate more revenue.
Muhammad Muwanga Kivumbi, the Shadow Minister for Finance also queried the priority areas by the government saying that they are not the areas that require urgent attention for financing.
Jesica Ababiku, the Adjumani Woman MP wondered why irrigation as a priority was narrowed to small-scale something that will disadvantage different parts of the country.
In response to queries by MPs, Minister Musasizi said that the projected discretionary resource envelope indicates that money available for spending is going down and that this automatically means that the expenditure has to reduce.
Ramathan Ggoobi, the Secretary to Treasury, said that the Ministry of Finance will look at the funding omissions when finalizing the detailed budget estimates.
He however asked the MPs to look at the efficiency of the allocated resources, especially at the agency levels.
The national budget for next financial year 2023/2024 is projected at 49.98 trillion, compared to 48.13 trillion for the current financial year 2022/2023.
The proposed 49.98 trillion budget will be financed through domestic revenue equivalent to 28.83 trillion, budget support amounting to 2.491 trillion, domestic borrowing 1.585 trillion, external project support worth 8.04 trillion, domestic refinancing of 8.798 trillion, and local revenue for local government (AIA) of 238.5 billion Shillings.
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”.
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