Kampala, Uganda | THE INDEPENDENT | The Uganda economy is projected to grow by 3.1 percent this financial year, according to the Ministry of Finance, Planning and Economic Development.
Before the outbreak of COVID-19, the government had projected the economy to grow by 6.3 percent, but this was disrupted when Uganda and its trading partners shut down their economies, virtually halting most of the economic activities.
Although the projected growth is on the lower side of the forecast made by the Central Bank at its February 2021 Monetary Policy Committee sitting, of between 3.0-3.5 percent, it is slightly higher than the 2.9 percent growth posted in the previous year end June 2020.
Finance Minister Matia Kasaija, like the Central Bank, put hope for faster rates of development in the coming years on how well the country manages the pandemic especially through vaccination, and whether the country will experience more waves. He was launching the National Budget week, a series of events aimed at creating awareness about priorities of the budget and the opportunities it presents to Ugandans, giving more information and clarification on key issues and concerns raised by the public.
It is also part of the Budget Transparency Initiatives that enable the government to interact with citizens on budget related matters. Previous budgets have been affected mainly by the reallocation of resources along the implementation of already approved expenditures, otherwise called supplementary budgets.
The Chief Executive of the Civil Society Budget Advocacy Group, Julius Mukunda says this indiscipline must stop if the budgeting process is to be meaningful for the development of the country. He also urges the government to take the National Budget Month seriously for the good of transparency and fight against corruption, not as a ritual.
The FY 2021/22 National Budget will focus on interventions aimed at sustaining recovery from the socio-economic setbacks caused by COVID-19 and other domestic shocks according to Kasaija. These include the locust invasion and floods, as well as external shocks such as supply disruptions caused by lockdowns world over, and trade barriers that affected the export of some commodities.
The budget strategy prioritizes investment in public Infrastructure and supporting the private sector to increase production and productivity plus interventions to address the health impact of COVID-19.
“Arising out of this budget strategy for FY 2021/22, we are projecting a growth rate of 4.3 percent, up from the projection of 3.1 percent for this financial year 2020/2021. This is based on the assumption that the negative consequences of the pandemic will subside with COVID-19 vaccinations and other clinical trials,” Kasaija says.
The growth rates are expected to reach levels of between 6.0 percent to 9.0 percent in three to five years, as more economic activities are expected to boost demand, fruits of ongoing public infrastructure investments as well and the oil and gas development. Kasaija is particularly excited about the prospect of the oil and gas sector and its impact on job creation.
According to the budget strategy, major allocations will be to human capital development, sectors like health and education taking 7.766 Billion Shillings, followed by governance and security with 6.968 billion Shillings. Integrated Transport Infrastructure and services will take 5.070 billion Shillings, while agro-industrialisation takes 1.688 billion Shillings.
But in the meantime, Kasaija urged Ugandans and the business community as a whole to pay taxes so that the country reduces on its borrowing.
The debt level is projected to stand at 52 percent of the GDP next financial year, a level considered dangerous for poor countries like Uganda.