It is budget period once again and many will be looking at figures of budget allocations to various sectors, changes in tax rates and performance of gross domestic product (GDP).

The budget for 2010/11 is the first under the National Development Plan of 2010/11'"2014/15, which is focused on removing the constraints to growth, employment and socio-economic transformation. This comes after studies have indicated that 'œusing an old and slow tractor may be a constraint but is not as binding as having a broken down tractor.' The constraints span a range of aspects including institutions, skills, infrastructure, mindset, security and governance.

Thus, government budgets are adopting a new focus, but need to be enhanced by refining the planning and then linking them to the plans. Gone are the days when sectors would wait for budget allocations to begin detailed planning on how and where to use the funds.

Lessons from previous budgets have indicated a need for increased efficiency, better strategic focus, redress of absorption levels, more prioritisation across and within sectors, and value for money. The limitation of financial resources dictates that we get the most we can in public services. It's only prudent that the national budget, which is only about 20% of GDP, catalyses or leverages the remaining 80% of the economy that is controlled by the private sector.

In the past, budget efficiency largely referred to the share of the allocated budget that a sector was able to spend regardless of the actual activities and their relationship with the core sector objectives. Consequently, 'œthe number of workshops' held became an output just like 'œnumber of technologies' produced regardless of whether they were adopted or not. Current and future budgets will have to increase adoption rates for high-yielding enterprises and technologies. Thus, after the budget on June 10, 2011 analysts need to focus on inter-sectoral utilisation.

Similarly, lessons from budget absorption are now being factored into future allocations. This implies sectors cannot simply claim what was indicated in the medium-term expenditure framework (MTEF). If a sector has no capacity to absorb its current budget, it is only rational to reduce the next allocation, but more so refocus the budget to resolving whatever it is that is constraining the capacity.

In light of the foregoing, there has been some public outcry since the budget for Ministry of Works and Transport was reduced yet many roads still need urgent attention. Regarding this sector, it is important to look out for what is being proposed to resolve the capacity challenges, after which even more resources like oil proceeds will be allocated. The weak private sector, which builds the roads through government contracts, needs to be complimented by equipping local governments as well as attracting more private investors. Government will also enhance early road designs and improve contract management and supervision among others. In this sector, look out for roads under design and those to be started or completed in the coming year. I bet this sector can only get better.

The aspect of value for money represents a major challenge as the process goes beyond financial audits to include both quantity and quality/value audits. The high cost of doing business in the country is in part responsible for the deterioration of the portfolio of good private firms. Any increase in costs reduces profits and at some point, good and ethical firms simply exit the market, leaving those who are ready to compromise quality for profit. A remedy to the above challenge is to increase the budget for each unit of output.

However, dealing with increasing unit costs calls for a scientific way of determining the actual cost, away from purely market forces. The market may be already tainted with a few 'bad' firms and is prone to oligopolistic inefficiencies and incompleteness. In a market with a few players, connivance and cartel arrangements are likely to result into a higher 'agreed' price. The lowest bid can easily be ten times more than the actual cost since it is only being determined in relation to other bids. Going forward, government will have to scientifically develop unit cost intervals to guide its procurement and contracting processes.

Strategic focus in a government budget has often been lost due to failure to link the budgeting, which is annual, to long-term investments '" some of which require several years of investment hence consideration across several annual budgets. In the past, most investments in this category were done under project loans and hence easily fell prey to inefficiencies embedded within the loan and related donor structures. As a consequence a number of strategic investments in energy, roads and technology were not given due attention. Now government has resolved to use domestic resources and has, accordingly, introduced vehicles like the Energy Fund to buffer resources for such strategic investments.

Strategic focus is important if Uganda is to emulate the growth experiences of China, India and Brazil etc. Countries experiencing double digit growth rates today are indeed reaping benefits of investments done several decades ago. Uganda needs to build infrastructure, skills and develop/adopt contemporary technologies, which calls for going beyond budgets to consider sectoral capacities and mindsets to plan for such a foreseeable future.

Given the historical conventional budget processes, new ways of thinking need to continue being adopted. For example, budgeting for adequate resources to areas of high priority will require reducing certain budgets, especially of sectors whose value can best be enhanced after a number of upstream investments in security, priority infrastructure etc, have been completed. This approach will not only enhance budget focus on planned investments, but also create and allocate the necessary fiscal space to priority areas.

Injection of substantial resources in a constrained economy can easily become inflationary and jeopardise any planned investments. However, failure to carry out the necessary investments is a recipe for slow economic transformation and growth.

Balancing aspects of macroeconomic stability with the required investment agenda is going to be an engaging debate but one which is not beyond comprehension. There is likely to be a trade-off of some lower priority sectors or those with a high priority but which are down in the sequence of interventions. Prioritisation and sequencing of projects will enable government tackle the binding constraints without losing the goose '" macroeconomic stability - that has already laid many golden eggs. While some may want us to believe that it is going to an 'election budget', it is designed to have an impact well beyond March 2011.

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