By Jumah Kakomo
Civil Society Organisations (CSOs) under their umbrella body, the civil Society Budget Advocacy group (CSBAG) have shared perspectives on the UGX. 72.130 trillion National budget for the upcoming financial year 2024/25, which was approved by the parliament of Uganda on 16th of May 2024.
On Sunday, CSOs gathered at SEATIN office Ntinda Kampala where discussion was held regarding the 2024/25 National budget, where they firstly acknowledged the government of Uganda for its commitment to upholding transparency in the budget process saying this recognition is evident in the Open Budget Survey Report 2023, which ranked Uganda a number one in East Africa regarding budget transparency, despite a call for the country to improve on participation which received a paltry score of 15 out of 100.
The executive director of CSBAG, Julius Mukunda said despite the achievements, as CSOs they are concerned about the budget formulation process for the financial year 2024/25 Budget, particularly at the budget approval stage. Especially, the limited time given to the legislators to scrutinize and debate the addition of UGX.14 trillion presented through corrigenda. He says Ugandans need to be wary about the rising abuse patterns of the budget making process witnessed this tear particularly through the financial year 2024/25 corrigenda.
“To us, some of the items in this corrigenda do not meet the criteria of ‘error’ and ‘omission’,”. Mukunde said.
Mukunde added that the sharp rise in the national budget figures from UGX52.7 trillion in FY2023/24 to UGX72 trillion FY2024/25 despite the present challenges Uganda is facing including but not limited to Monday’s downgrading of Uganda from B2 to B3, reducing external financing, narrowing fiscal space, and a soaring public debt.
“These factors are expected to negatively impact the implementation of this Budget,”. Mukunde added.
*Debt Situation in Uganda*
The executive director of SEATINI, Jane Nalunga says Uganda’s public debt stock has peaked at UGX 97.4 trillion as reported by the Auditor General in December 2023. She highlights that the IMF forecasts that Uganda’s public debt will increase to approximately UGX 110.6 trillion by the end of Financial Year 2024/25, saying this raises concerns about the sustainability of Uganda’s debt and the country’s current nominal debt to GDP ratio is 53%, exceeding the world bank’s benchmark of 50%. Additionally, the domestic interest payment to revenue ratio is at 16.3% surpassing the benchmark of 12.5%. However, the external Debt to GDP stands at 19.1%, well below the threshold of 40%.
She says the government also plans to further increase debt in the next financial year 2024/25 by borrowing UGX 8.9 trillion domestically from commercial banks saying this move poses significant risks to private sector lending due to the heightened exposure of Uganda’s commercial bank assets to government debt and loans.
According to Nalunga, interest payments have returned to pre pandemic levels after a slump. Interest payments are expected to increase to UGX9.5 trillion in FY2024/25 from UGX8.2 trillion in FY 2023/24. Additionally, commitment fees from projects under review have surged by 44% from UGX 77.5 billion in FY2021/22 to UGX112.018 billion in FY2022/23.
“These developments will compromise service delivery as a significant portion of the collected revenue goes to service debt. High interest payments on loans now consume a substantial portion of the budget and domestic revenues. The cost of servicing debt has placed Uganda in a situation of debt distress and heightened vulnerability to a debt crisis,”. Nalunga stated.
The executive director of food rights Agnes Kirabo says the government increased the agro industrialization budget of UGX1.6 trillion up from the budget framework paper amount of UGX1.2 trillion , however this is still lower than last FY 2023/24 of UGX1.8 trillion, implying a cut of UGX115.20 billion. She says the programme is still heavily dependant on external financing.
“We implore the government to consider adequate domestic financing of the Agro industrialization programme, especially on the domestic of extension services and post harvest handling through supporting farmers to improve food security value addition and marketing of their agricultural produce,”. Kirabo said.
The executive director of Center for Heath, Human Rights and development (CEHURD) Fatia Kiyange says there is a need to strike a balance between infrastructure and human resources for health as well as re engage development partners especially under the programme of human capital development.
Julius Mukunda says as CSOs, they urge the government to exercise restraint in abusing public finance management laws, leading to leakage and waste of public resources.
“We call for fiscal discipline, transparency, and accountability to ensure sustainable economic growth and development,”. Mukunde added.
