Government to prioritise debt management and economic growth

Zawya

31-01-2025

Government will prioritise debt management, domestic revenue mobilisation, and economic transformation in the next financial year.
This revelation was made by the State Minister for Finance (General Duties), Hon. Henry Musasizi, while justifying the motion on the National Budget Framework Paper for Financial Years 2025/26- 2029/20.
Musasizi revealed that the preliminary resource envelope stands at Shs57.44 trillion and that this financial year marks the first implementation phase of the National Development Plan IV which aims to increase household incomes, fully monetise the economy and enhance employment for sustainable socio-economic transformation.
He underscored that focus would be placed on agro-industrialisation, tourism, minerals, science and technology, alongside critical enablers such as defence, security, electricity, strategic roads, and the Parish Development Model.
He reassured the House that no new taxes would be introduced but that efforts would be directed towards improving efficiency in tax administration.
The Vice Chairperson of the Budget Committee, Hon. Remegio Achia who presented the report emphasised that the budget framework paper seeks to strengthen Uganda's economic resilience while ensuring social development. He noted that while economic growth is projected at 6.4 per cent, the burden of debt remains a concern. "We must strike a balance between financing critical infrastructure and maintaining a sustainable debt-to-Gross Domestic Product (GDP) ratio," he said.
Uganda's total public debt currently stands at Shs94.9 trillion as of June 2024, with debt servicing consuming nearly a third of domestic revenue.
To address this, Achia said the government has set a domestic revenue target of Shs33.68 trillion up from Shs31.98 trillion in the current financial year. Accordingly, the Uganda Revenue Authority (URA) will intensify tax compliance measures, including expanding the tax base and enforcing digital tax systems such as the Electronic Fiscal Receipting and Invoicing Solution (EFRIS).
Achia stressed the importance of ensuring that resources are utilised efficiently. "Our priority must be value for money. Every shilling spent must yield tangible results for the Ugandan people," he said warning that wasteful expenditure and corruption in public institutions must be addressed to maintain fiscal discipline.
To prevent excessive borrowing, the government has reduced domestic borrowing from Shs8.97 trillion to Shs4.01 trillion. However, external financing is set to increase to Shs12.81 trillion to support key projects such as the Standard Gauge Railway and the Greater Kampala Metropolitan Area Programme.
Achia acknowledged the inconsistencies between the Budget Framework Paper and the National Development Plan IV stating that sector priorities must be realigned to ensure effective resource utilisation. "There is a need to align sectoral priorities with our development plan to ensure that resources are utilised effectively for Uganda's long-term progress," he said.
Achia observed that frequent supplementary budget requests, often arising from unplanned expenditures, create fiscal imbalances and hinder long-term planning. "We need to strengthen budget discipline to avoid excessive reliance on supplementary requests that disrupt the implementation of key development projects," he noted.
Kira Municipality MP, Hon. Ibrahim Ssemujju Nganda who presented a minority report criticised the budget's priorities, arguing that non-essential expenditures have been prioritised while critical areas are underfunded. "Donations in this budget amount to Shs159 billion, fuel costs stand at Shs355 billion, special meals and drinks at Shs298 billion, and welfare and entertainment at Shs139 billion. This is where the government has placed its priorities," he said.
He further condemned the government for allocating only Shs200 billion to clear domestic arrears, including unpaid pensions and gratuities. "Payment of domestic arrears should be a top priority in next year's budget," he argued.
Other MPs raised concerns about the government's ability to raise the required revenue.
Sheema South Representative, Hon. Elijah Mushemeza questioned the feasibility of realising Shs57 trillion in revenue when such figures have never been achieved in previous years. "We have never realised Shs57 trillion in the last five financial years. What assurance can you give us that this time around you will?" he asked.
Hoima East Division MP, Hon. Patrick Isingoma questioned why the budget had not prioritised funding for the Positron Emission Tomography (PET) machine needed for cancer detection and treatment. "This machine is only available in Nairobi, where a single round costs US$1,500. Most people go to India for treatment because we lack this facility," he lamented.
The Leader of the Opposition, Hon. Joel Ssenyonyi urged the government to take domestic arrears more seriously, noting that they now exceed Shs14.6 trillion. He also criticised the government's for failing to compensate victims of the Kiteezi landfill disaster.
Commenting on alleged luxury spending, Musasizi clarified that money provided for the army, police, and Uganda prisons are not luxury spending. 'Shs1.1 trillion is medical clothing for medical workers; we have an item of clothing under Parliamentary Commission for protocol people, we have Shs900 million for Uganda Revenue Authority and this is attire for tax collectors, under Ministry of health, shs900 million for medics and nurse's uniforms,' he said.
The Deputy Speaker, Thomas Tayebwa urged the government to consider the minority report and cost tax proposals to guide the budget. He also suggested that the minister clearly indicate which budget proposals would be implemented.
Distributed by APO Group on behalf of Parliament of the Republic of Uganda.