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Five reasons why Sh40 trillion budget is bad

Does Uganda have a budget?

Commenting on the shifting figures, Fred Muhumuza, an economist who previously advised the Finance Minister said the budget is changing at such a fast rate that he is not sure whether there is a budget at all.

He said government budgets are supposed to signal its intentions for private players, but the rate of changes is confusing instead.

He says private players who planned basing on the government allocating money in certain areas get thrown off when there are budgets cuts in those areas and the money is taken to other areas. It gets worse if the new areas were not planned for at all.

“There is a lot of uncertainty and lack of consistency with a lot of off budget items negatively affecting budget items,” he told The Independent in an interview.

Just this March, for example, on top of the US$100 million for Security, government requested for supplementary expenditure budgets worth billions of shillings to cater for procurement of two Bombardier planes for the revival of the national flag carrier; Uganda Airlines, facilitation for establishment of the Atiak Sugar Factory, purchase Okello House which is an extension of the Nakasero Lodge in Kampala, and construction of a centre of excellence in Pediatric Surgery in Entebbe, among others.

“If you look at how much the current budget has changed because of supplementary budgets you wonder whether the budget is reliable anymore,” Muhumuza said.

Intense domestic borrowing; some of which is intended to finance supplementary budgets, especially ahead of the 2021 elections threatens to make the bad situation worse.

Supplementary budgets should, under current regulations, not exceed 3% of the entire national budget but these have been increasing from 4% in 2008/2009, to 7.2% in 2009/2010 and over 30% of the budget in 2010/11.

These tend to get worse ahead of elections.

Just months to the 2011 election, the government pushed through parliamentary budgets of close to a trillion shillings – with the last round coming in December 2011 right in the middle of campaigns.

Just months to the 2016 election, the government again requested for a Shs847billion supplementary budget, of which only Shs11.9 billion was for development expenditure and a whopping Shs728.1 billion for recurrent expenditure.

In both cases, Uganda suffered. Post-2011 election inflation hit the highs of 30% and post 2016, the economy shrunk further.

The Defense/Security had already thrown this year’s budget off balance.

Butambala MP Muwanga Kivumbi who sits on the parliamentary Budget Committee told The Independent that already Defense/Security was consuming the bulk of new money that the Finance Ministry has asked parliament to approve in an adjusted budget.

The Independent in its recent cover story titled `Museveni doubles military spending’ (Issue565, March 29-April 04) exclusively reported that President Museveni had directed finance officials to push through parliament some US$100 million (Approx.Shs370 billion) as part of a supplementary for the defense budget.

The directive to increase defense spending followed two meetings this month; one with security chiefs and another with officials from the Finance Ministry.

Museveni first met the security chiefs and discussed “tensions with Rwanda”, said a source familiar with the details of the meeting on conditions of anonymity because of the sensitivity of the matter.

After this meeting, the source added, Museveni then summoned officials from the Finance Ministry who he directed to make the allocations.

The Independent also reported that the Security docket would get a significantly bigger allocation in the next FY2019/20 budget that Finance officials are putting together.

The Independent understands, the Finance Ministry will add another $270 million (Approx.1 trillion) to the defense budget for 2019/2020 alone.

Kivumbi said the Security budget is jumping from Shs2 trillion last year to Shs4 trillion. That will push Uganda’s defense spending to over $1 billion dollars again.

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