The government of Uganda plays a big role in our financial economy. Whether you're just an ordinary person or a company, it is important to understand the national budget.
It gives us clues about how the government plans to handle its finances in the coming year, and this has real effects on investments and businesses. So, if you want to grow your money, it's essential to pay attention to the national budget.
When we talk about investors, we're not just talking about foreigners setting up factories or doing complicated stuff. We're talking about everyday people like you and me who want to make their money grow. We have the opportunity to invest in money markets and other investment options to achieve that goal.
The national budget shows how the government plans to get the money it needs. It mostly does this by borrowing and collecting taxes. In the fiscal year 2023/2024, Uganda aims to gather a huge amount of Shs 52 trillion.
Of this, 56% will come from borrowing, and 38% from taxes. How well the government does in these areas will affect interest rates in the market, which can be good or bad news for investors like us. It is important to know that the government of Uganda is the biggest and probably the safest borrower around.
That's because their debt is backed by the full faith and economic power of the Republic of Uganda. They raise money by selling something called government paper or treasury bonds/ bills. These are considered high-quality investments and have a big influence on interest rates and the prices of other assets.
The government wants to reduce how much it borrows from within Uganda in the fiscal year 2023/2024. This move affects how much interest rates banks charge for loans. It could help control inflation and make prices more stable. That's good news for investors who want reliable returns and stability.
Now, let's talk about taxes. The budget for the fiscal year 2023/2024 aims to collect Shs 27.4 trillion in taxes, which is a big increase from the previous year. They plan to do this by making some changes to the tax laws.
For example, they want to remove a special benefit for new investments called initial allowances. They also want to expand the list of things that are taxed, like electronic services, goods sold at auctions, and goods supplied in Uganda.
These measures are meant to increase the government's revenue by taxing more income in the country. But they also give us an idea of which industries and companies might make less profit because of higher taxes. That's something to keep in mind when thinking about investing in those sectors.
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For investors, this budget could mean higher interest rates. If the government struggles to collect enough taxes, they might have to borrow more money to cover their expenses. And that could lead to higher interest rates. So, it's important for investors to carefully consider how these rates might affect their investments and adjust their strategies accordingly.
In conclusion, the Uganda national budget holds important implications for investors, providing insights into the financial landscape and opportunities for growth. As an everyday investor, now is the time to explore investment options, including opening an account with a reputable unit trust.
By aligning your investment strategy with the government's financial plans and staying informed about market trends, you can position yourself advantageously and make the most of the opportunities presented by the national budget.
The author is Marketing Lead, XENO Investment
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