Uganda: 2019/2020 Budget Shoots Up to Shs40 Trillion - Finance

Kampala — The crop up in classified defence expenditure, debt refinancing among other things have pushed up next year's Budget to Shs41 trillion. This represents an increase of Shs7 trillion from the initial budget.

The initial budget for 2019/20 as per the National Budget Framework Paper, which was approved by Parliament in February was Shs34.3 trillion.

The rise in budget will also raise Uganda's fiscal deficit to Gross Domestic Product (GDP) to 8 per cent, which is also high compared to last year's figure.

In an interview with Daily Monitor shortly after releasing quarter four funds for financial year 2018/19 Budget last week, the deputy secretary to treasury Patrick Ocailap said: "The fiscal deficit as a percentage of GDP is going to be high at 8 per cent of the GDP because of the increase in classified defence expenditure of about Shs2 trillion, expenditure in Airlines totalling Shs350 billion, debt refinancing of Shs250 billion, among others."

However, Mr Ocailap was quick to state that the situation is not worrying because after the next financial year's budget, the level of fiscal deficit will decline.

The total budget for this financial year - 2018/19 - which Parliament approved is Shs32.7 trillion, which is up by 13 per cent compared to the financial year 2017/18 budget.

The 2018/19 budget comprises of recurrent expenditure of Shs9.4 trillion, development expenditure of Shs13 trillion and statutory expenditure of Shs10 trillion.

It is projected that domestic revenue will fund 64 per cent of the total expenditure, down from 67 per cent budgeted in the previous year.

In this fiscal year, the fiscal deficit was projected at 6.6 per cent of the GPD, representing a total deficit of Shs7.428 trillion. This will be funded by increased domestic borrowing of Shs1.785 trillion through treasury bonds and bills plus external borrowing.

Last week, the Ministry of Finance released Shs4.948 trillion for quarter four - the last quarter of this financial year.

Public expenditure

This means that in total, government has released Shs24.732 trillion for public expenditure since the beginning of the financial year 2018/19, reflecting a performance of 103.5 per cent.

Statistics in the Ministry of Finance show that the annual cumulative annual release for the financial year 2018/19 as percentage share of total expenditure include: wage recorded a percentage of 100.7 per cent, non-wage 106.8 per cent, government of Uganda Development budget recorded 107.2 per cent, debt and treasury 100.4 per cent.

Under external financing and Apportion in Aid, statistics indicate that cumulatively external financing recorded total percentage of 76.3 per cent of the released funds while Appropriation in Aid recorded percentage shares of 58.2 per cent.

Surplus

Speaking on the status of public expenditure for this financial year ending on June 30, Mr Ocailap said: "We have a surplus of Shs365 million, following the new tax measures that were introduced during this financial year, especially the mobile money tax."

The Ministry of Finance on behalf of government of Uganda has a five-year Domestic Revenue Mobilisation Strategy.

The strategy is expected to include tax policy reforms, including a rationalisation of exemptions and tax administration reforms to improve compliance.

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