Shs285 billion projected rise in local revenue in next financial year worries MPs

Parliament is at the tail end of processing the Budget Framework Paper (BFP) for financial year 2024/25 but there are worrying features in the resource envelope that have left some of the lawmakers worried about the outcome.

Sectoral Committees have completed their presentations to the Budget Committee which is expected to present a report on BFP to Parliament on Thursday January 25 for approval. This is not the end of the budget process anyway because the figures will be sent back to the Ministry of Finance for final allocations.

At the BFP level, the Ministry of Finance indicated what it has allocated to each of the Ministries, Departments and Agencies (MDAs) and when Parliament receives the draft national budget by March 2024, all recommendations for funds for priorities that had not seen the light of the day in the BFP will be considered.

With the total budget projected to reduce by UGX 14.10 billion from UGX 52.736 trillion in the current financial year to UGX 52.722 trillion in 2024/25 financial year, what has worried lawmakers on the Budget Committee is the projected increase by 0.9 percent in the local revenue.

According to the BFP, the local revenue expected to be collected by the Uganda Revenue Authority is projected to be UGX 29.957 trillion in the next financial year, it will have only increased by UGX 285 billion from the UGX 29.672 trillion that URA is expected to collect by June 30, 2024.

“This should be a cause for worry, if the revenue collection can only have an increase of 0.9 percent. We are always being told that the economy is growing and revenue collection is increasing by 0.9 percent?” asked Elijjah Okupa, MP for Kasilo County.

Ssemujju Ibrahim Nganga, MP for Kira Municipality weighed on the matter saying it will be of great concern to the citizens to see Parliament pass a national budget whose local revenue is not going to increase in trillions of Shillings.

“On domestic revenue, if we are going to grow it by just UGX 285 billion, isn’t that a disaster for the whole country because this should be a company not a country, but the local revenue is not increasing with it,” wondered Ssemujju.

This comes at a time when the Committee on Finance recommended the provision of UGX 55.9 billion to URA to recruit 1,278 new staff for the effective collection of revenue.

But lawmakers questioned the process through which URA has been recruiting its staff saying it does not consider national outlook. They reasoned that a thorough investigation be carried out by the Committee on Finance to establish the criteria used by URA to recruit staff. It is not clear whether the Budget Committee will carry the recommendation for recruitment of new staff when the report on BFP is presented to the House.

Buikwe South MP, Michael Lulume Bayiga said that there are reports that URA applies an unfamiliar recruitment system without looking at which part of the country the recruits come from.

“I don’t know whether the Committee interrogated how URA recruits because I am aware that they have already recruited 600 workers in what they call blind recruitment. It offends equal opportunity consideration. We may want to vote to give URA money to do recruitment without the necessity of knowing who is being recruited blindly. We need to know the 600 who were recruited and we want to see the list. We can be in position to effectively verify where people are coming from. This committee cannot be oblivious of the recruitment process and we see they use codes,” argued Bayiga.

Amos Kankunda, Chairperson Committee on Finance, Planning and Economic Development, defended the URA budget for recruitment of staff saying much as members of the Budget Committee have questions about how they are recruited, the tax body needs enough manpower to collect the required revenue.

“As a committee we observed that given the revenue mobilisation, it is important to increase staff. What we know is that they advertise but we are not sure of how it is done. We are going to monitor how it is done and ensure there is regional balance,” said Kankunda.

Reduction in borrowing

According to the documents presented before the Budget Committee by Kankunda who is also the Rwampara County MP, the government plans to reduce borrowing by UGX 2.75 trillion in the next financial year. This will be realized by the projected reduction of the Budget Support which is money lent directly to the Government but not through specific projects, from UGX 2.78 trillion in the current financial year to UGX 28.94 billion in 2024/25 financial year.

However, domestic borrowing will increase by UGX 726.80 billion from the current financial year’s figure of UGX 3.38 trillion to UGX 4.11 trillion next financial year while borrowing externally for projects will increase by UGX 628.32 billion up to reach UGX 8.876 trillion from UGX 8.248 trillion in the current 2023/24 budget.

Meanwhile, public debt continues to worry different players with the Ministry of Finance putting it at UGX 86.75 trillion as of June 2023 while presenting to the Committee on Finance. But the Auditor General’s report for the financial year ending June 30, 2023 put the public debt at a higher figure of about UGX 96 trillion.