Published by Patra K on

The numbers in Uganda’s budget for FY 2021/2022 do not add-up

Whereas Uganda’s national budget for the financial year 2021/2022 is UGX 45 trillion ($12.3 billion), government will only be able to raise UGX 21.6 trillion ($5.9 billion), constituting 48 percent of the total national budget. This begs the question of how the deficit of 52 percent is going to be covered? 

Paradoxically, out of the UGX 21.6 trillion ($5.6 bn) to be collected through domestic revenue, UGX 15.7 trillion ($4.3 billion) will go into external debt repayment – most of the funds having been borrowed from China’s Exim Bank, while UGX 5 trillion ($1.4 bn) will finance the wage bill, yet there is also the matter of classified expenditure which is allocated UGX 4.8 trillion ($1.3 billion).

Thus, debt repayment and the wage bill will together take a total of UGX 20.7 trillion out of the UGX 21.6 trillion tax revenue projections, leaving a balance of UGX 900 billion only. How will the government finance health, education, agriculture, infrastructures, and above all, defense and security?

To the ordinary citizen, this does not sound like an economy in good health. Will the budget deficit be covered through donations? Or grants? Or internal borrowing? Or external borrowing? Or a combination of all the above?

If borrowing, who will government borrow from, China, World Bank, IMF, or African Development Bank? What is the implication on the Ugandan taxpayer? Already the volume of Uganda’s debt stock is becoming an issue of concern to some citizens.

Uganda’s debt stock stood at UGX 63.35 trillion ($17.9 billion) as of October 2020 as per the Bank of Uganda, December Report, 2020. External debt constituted 67 percent of the total debt at UGX 42.4 trillion ($11.6 billion).

There are concerns within the citizenry about the government’s continued borrowing from Chinese financial institutions which are perceived to be a more pernicious lender than the western counterparts. Government still considers China as a better development partner than the conceptual west (Europe, America, and Australia).

To date, government seems to be very uncomfortable when European countries and the United States of America speak about the democratic governance deficits and violations. The US funds a big chunk of Uganda’s health budget including provisioning of the ARV’s medicines used by people living with HIV/AIDS.

The secret known is that there is no way the government of Uganda can accept aid, grants, and loans from western powers and castigate them when they speak about the mistakes committed by government.

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