Parliament has passed the Budget Framework Paper of 49.98 trillion Shillings for the next financial year 2023/2024.
This is in line with the Public Finance Management Act that sets 1st February as deadline for the House to approve the framework.
It was approved on 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 49.98 trillion national 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.
While the budget is set to increase by 1.8 trillion from the current financial year 2022/2023 budget of 48.1 trillion Shillings, discretionary expenditures which is money that can be spent by different sectors is to reduce by 2.5 trillion due to the increase in the budget for interest and debt payment which has risen to 19 trillion from 16 trillion 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”.
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 (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 (ugx1.2 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). According to the sector allocations, the Human Capital Development program which includes Education, Health, Gender and Social Development has been planned to receive 9.005 trillion Shillings, an allocation lower than that of 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 83.94 billion Shillings.
On the other hand, governance and security programme is proposed to receive 6.8 trillion, lower than the current financial year budget of 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 4.65 trillion up from the 4.3 trillion allocated in the current financial year.
The other programmes are Energy and Mineral Development Sector 1.8 trillion, Private Sector Development Programme 1.79 trillion, manufacturing 268.4 billion, Natural Resources, Environment, Climate Change, Land and water programme 547.3 billion, tourism 89.3 billion, Digital Transformation Programme 176.7 billion and others.
Some of the funds through which government is channeling resources for wealth creation are 872.6 billion for the eight poorest sub regions including Karamoja, Teso, Bukedi, Bugisu, Busoga, Acholi, Bunyoro, and West Nile, exporters fund, 740 billion, Parish Development Model (PDM) 105 billion, Emyooga 100 billion, Small Business Recovery Fund 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 Karuma Hydro Power dam and who was responsible for its repair.
Sarah Opendi, the Totoro Woman MP said that government needs to put more emphasis of factors negatively impacting the tourism sector like the poor infrastructure.
The Deputy Speaker Thomas Tayebwa expressed concern about the 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 100 shillings collected, over 37 shillings 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 percent of the total budget and only 4.7 percent 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 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.