Next year, in 2019/20, the government of Uganda plans to spend 23.8% more money than it has spent, this year financial year. According to a national budget read yesterday, by Finance, Planning and Economic Development (MoFPED) minister, Hon Matia Kasaija, Uganda will in 2019/20 spend UGX40.5 trillion, up from UGX32.7 trillion in 2018/19.
Given Uganda Bureau of Statistics (UBOS) population projections of 40 million and 41.2 million people for 2019 and 2020 respectively, that is an increase of 20.2% from UGX817,433 to UGX982,187.
But where will he get this money from?
According to Kasaija, out of the UGX40.5 trillion, UGX20.9 trillion (51.6%) will be tax and non-tax revenue raised locally. As a result Uganda Revenue Authority (URA) must collect 25% more revenue- their targets have been raised from UGX16.4 trillion in 2018/19 to UGX20.45 trillion next financial year.
KAsaija also expects to borrow UGX2.8 trillion (7%) from local financial markets. The finance minister also plans to borrow from external sources, as well as receive project support from Uganda’s foreign development partners, altogether, UGX9.4 trillion (15.9%).
He also expects general budget support of up to UGX675.2 billion (1.7%) and aid of up to UGX201.1 billion.
Because of the heavy debt burden, domestic debt re-financing will account for UGX6.5 trillion or 15.9% of the resource envelope- this is not actual money though.
According to Kasaija, the stock of Government debt rose to UGX42.8 trillion (USD11.5 billion) as at end-December 2018, up by 15.1% from UGX37.2 billion (USD10.2 billion). Of this external debt constitutes is 66.5%- UGX28.4 trillion or USD7.7 billion.
How will the money be spent?
Thanks to a burgeoning debt and the attendant need to restructure, Uganda will spend UGX10.6 trillion on debt repayment.
Kasaija however insists that our debt, although high, it is still sustainable- at 41.8% of GDP in nominal terms and 31.7% of GDP in present value terms, as of December 2018. This is well below the threshold of 50% Debt to GDP ratio contained in the Charter for Fiscal Responsibility and the East African Community (EAC).
Works and transport will take UGX6.46 trillion, while security will account for UGX3.62 trillion and education and sports UGX3.37 trillion. The government will spend UGX3.14 trillion on interest payments, UGX3 trillion on the energy and minerals sector, UGX2.62 trillion to health and UGX1.73 trillion to the Justice/Law and order sectors.
The accountability sector will be apportioned UGX1.54 trillion while local governments will get UGX1.25 trillion. The agriculture, animal industry and fisheries as well as water and environment sectors will each get UGX1.1 trillion. Others are: public administration (UGX979.1 billion), Public Sector Management (UGX857 billion), legislature (UGX687.8 billion) and Lands, Housing and Urban Development at UGX227 billion. Trade and industry will get UGX202.8 billion, social development UGX219.2billion, tourism will get UGX193.7 billion and Science, Technology and Innovation, UGX186 billion.