The Ministry of Finance is working on adjustments to the proposed Shs49.9 trillion budget for the financial year 2023/24 after Parliament recently approved the Budget Framework Paper (BFP).
The BFP is an important document in the budget process because it carries the proposed funding allocations to the Ministries, Departments and Agencies (MDAs), the projected tax base and the entire resource envelope.
While working on the budget, the Ministry of Finance has 10 most priority areas for the expenditure of the proposed Shs49.9 trillion national cake for the coming financial year.
According to a document signed by Minister Matia Kasaija which was handed over to the Budget Committee of Parliament during the processing the budget, the 10 priority areas will be considered in the program based budgeting that has been adopted by the government.
The listed priority areas for the new budget are; Peace and Security under the Security and Governance program; roads; electricity; railways; irrigation using solar power; industrial parks; support to medical schools and science-based research development; enhancing support to Parish Development Model; Oil and Gas development and capitalization of Uganda Development Bank and Uganda Development Corporation.
“I would like to assure Parliament that the pace of implementation of all other government programmes will continue as planned. Any omissions that could have arisen during the adjustment of the National Budget Framework Paper will be addressed in the Second Budget Call Circular to facilitate the finalization of the Budget estimates for Financial Year 2023/24,” reads part of the document.
Who takes what?
With the ten priority areas in place, the BFP that was approved by Parliament also outlines the proposed share by the different programmes of government in alignment to the National Development Plan (NDP) 3.
The lion’s share of the budget will go to the Development Plan Implementation programme which has been allocated Shs18.8 trillion. Other programmes are Human Resource Development (Shs9 trillion); Governance and Security (Shs6.82 trillion); Integrated Transport Infrastructure and Services (Shs4.6 trillion); Private Sector Development (Shs1.7 trillion); Agro-Industrialization (Shs1.4 trillion) and Sustainable Energy Development (Shs1.2 trillion).
Other programmes proposed appropriations are; Shs919.9b for Legislature, oversight and representation; Shs634.6b for regional balanced development; Shs539.2b for sustainable petroleum development; Shs547.3b for natural resources, environment, land and water ; Shs422.7b for administration of justice and Shs268.4b for manufacturing.
Meanwhile, programmes that are expected to receive the lowest funds in the next financial year are; community mobilization and mindset change (Shs21.9b); Mineral Development (Shs38.5b); tourism development (Shs89.2b); sustainable urbanization and housing (Shs104.9b); digital transformation (Shs176.7b) and innovation and technology development (Shs177.5b).
Funding budget
The Ministry of Finance projects raising Shs28.8 trillion from local revenue, Shs.2.49 trillion from Budget support and Shs1.5b from domestic borrowing.
Government also projects Shs8 trillion from external borrowing, Shs8.7 trillion from domestic refinancing and Shs238.5b from local government-collected revenue.
Comparing the current budget and the projections for the next financial year the Government will borrow less domestically by Shs3.4 trillion down from Shs5 trillion in the 2021/22 budget whereas external financing will increase by Shs1.3 trillion in the coming year.
While approving the BFP on February 1, parliament adopted the report of the Budget Committee which carried within it more requests for funding to the different MDAs.
If Finance Ministry allocates more money to meet the recommendations, the Second Budget Call Circular expected next month would come with a resource envelope projection of up to Shs56 trillion after a suggested increment of Shs6.1 trillion.
However, the House also adopted a minority report by Budget Committee members-Muwanga Kivumbi (Butambala County), Michael Lulume Bayiga (Buikwe South) and Michael Bukenya (Bukuya County) opposing the request for additional Sh6.1 trillion on a budget whose revenue projection is Sh28 trillion.
Apart from the Sh28 trillion projected from the collections by the Uganda Revenue Authority (URA), the Government expects Sh2.49 trillion from Budget support, Sh1.5b from domestic borrowing, Sh8 trillion from external borrowing, Sh8.7 trillion from domestic refinancing and Sh238.5b from local government revenue.
Kivumbi while presenting the Minority report last week, questioned where the additional Sh6.1 trillion recommended by the majority report would come from the revenue base which cannot be increased beyond the projected Sh28 trillion.
“The majority report has come up with a funding gap of up to Sh6.1 trillion in unfunded priorities without identifying the source of funds for the priorities identified. Government came up with the resource envelope showing the proposed sources of revenue in the BFP of FY2023/24,” said Kivumbi.
He added that, “for the budget committee to identify a huge funding gap of Sh6.1 trillion to be added to the already exaggerated Resource Envelope of Sh49.9 trillion without identifying the sources of revenue renders this exercise an academic trip to no prolocutor practical import into the budget process.”
What is unfunded?
A closer scrutiny of the Budget Committee report indicates that recommendations from the sectoral committees where the MDAs pleaded for more allocation of funds to run the planned projects, the unfunded priorities and budget cuts have swept across the entire government.
Other unfunded priorities include non-wage, recurrent wages and development expenditures in several MDAs. The Parliamentary Commission is also highlighted among those that have wage shortfalls and need for development funding.
According to the majority report of the Budget Committee, Parliament needs Sh76.25b to cater for projected non-wage shortfall in running its legislative, oversight and representation functions.
“This if not addressed will impede timely responsive oversight, legislation and the representation function. The Committee therefore recommends an additional amount of Sh76.25 billion to cater for the projected non-wage current shortfall,” reads part of the report.
Parliament which had originally been allocated Sh919.9b in the BFP also wants Sh8.79b to cater for the wage shortfall for Members of Parliament and Staff and Sh107.65b in additional funding for construction of Chambers, procurement of vehicles and upgrade of ICT infrastructure.
The Electoral Commission requires Sh20 billion to organise women councils elections across the country after the exercise was abandoned last year due to Government’s failure to release the funds.
The electoral body also wants Sh11.1b for wages and Sh7.26b to establish offices for Registrars in the 10 new cities and Terego District which all came into force on July 1, 2021.
Following a public outcry over the state of roads in Kampala, the request for Sh73.63b for rehabilitation and maintenance of the city roads by Kampala Capital City Authority (KCCA) was not provided for.
But, the Budget Committee recommended that the aforesaid budget is a priority that needs to be funded if motorists are to overcome potholes in the next financial year. KCCA is also choking on debts amounting to Sh22b that is owed to service providers.
Under the Office of the President, there is a need for Sh20bn to enable the Internal Security Organisation (ISO) to enhance facilitation to internal intelligence collection; Sh3Ob be provided to facilitate Development and Commercialization of human and animal vaccines.
There is also a need for Shs34b to the Office of the Prime Minister to facilitate budget enhancement and strengthening government wide coordination, monitoring and evaluation.
State House also planned to purchase new vehicles for the President and his Vice President but the Ministry of Finance in the BFP did not allocate the requested Sh21b.
In the Ministry of Foreign Affairs, the Budget Committee recommended for additional funding for; reinstatement of Sh18.173b for missions abroad to do promotion of economic and commercial diplomacy as well as tourism and Sh16.196b meant for travel abroad, workshops and Seminars to enable the Ministry and Missions abroad effectively execute their mandates.
Other entities are Sh80b to URA to support the implementation of the Domestic Revenue Mobilisation Strategy and Sh100b to the tax collection body for staff recruitment and wage enhancement.
Much as Uganda is a signatory to the Maputo Declaration where African countries committed to be allocating at least 10 percent of their annual national budgets to Agriculture as a response to the stagnation of the sector which employs a biggest chunk of their populations, the current BFP has not recognized that. In the current BFP, Agriculture has been allocated less than 3 percent of the total proposed budget.
Parliament now wants Finance to find money to reinstate the budgets amounting to Sh21Ob for the critical priority areas that have been cut across the sector.
The Ministry of Defense and Veteran Affairs has consistently been among the sectors that take the lion’s share of the budget but much of this money has been on classified expenditure, procurement of equipment and operations hence leaving behind the need to enhance salaries for low ranked soldiers.
Parliament now wants the Government to provide for 33 percent salary enhancement for soldiers from the rank of Captain and below, while maintaining the existing enhanced salaries for higher ranked officers that were provided in the course of FY 2022/23.
The tourism industry which has been touted as one of the magic bullets for economic growth has been critically affected by the budget cuts with its budget going down from Sh189b to Sh89b in the current BFP.
In March, on top of the tabling of the Second Budget Call Circular that has the actual revised figures, government will also table Ministerial Policy Statements that will be scrutinised by the Sectoral Committees before the National Budget is passed by May 30.
The Minister of Finance is expected to deliver the budget speech to the country in the second week of June which is preceded by State of the Nation Address by President Yoweri Museveni a week earlier.
