Uganda public debt worsens
Last week, the Committee on the National Economy revealed that Uganda’s public debt stock increased by 22 percent from $13.3 billion (UGX 50.9 trillion) in the 2019/2020 fiscal year to $18.164 billion (UGX 69.5 trillion) by end of the 2020/2021 fiscal year. According to Hon. Robert Migadde, the vice chairperson of the committee, the total public debt has increased over recent years due to the implementation of Government’s investment agenda and the effects of the COVID-l9 pandemic that caused revenue shortfalls.
The committee’s report also reveals that $12.571 (UGX 48.1 trillion) of the debt stock is classified as external debt, with domestic debt totaling $8 billion (UGX 30.7 trillion). SecretsKnown is stunned by the increase in external debt because of government’s unending appetite for borrowing not withstanding corruption that starts from initiation, project designing, and implementation with less focus on value for money.
The executive branch of government seems unbothered about the shocking revelations of the committee with limited pronouncements and continued extravagance on administration costs. SecretsKnown reflects on statements recently made by president Museveni on the rise of prices of commodities and fuel advising citizens to tighten their belts as he and his cabal contrastingly chock on huge costs of administration and expenditure in StateHouse and other government public institutions.
Whereas the Uganda Revenue Authority had set out to collect $3.214 billion (UGX 12.3 trillion), SecretsKnown established through Sunday Monitor -Uganda’s news daily on how the taxman is struggling to meet the UGX 12.3 trillion revenue collection target for the 2020/2021 fiscal year. This was after it found itself staring at a $235.2 million (UGX 900 billion) revenue deficit halfway through the aforesaid fiscal year.
It is imperative to note that, initially in the 2020/2021 fiscal year, the Finance ministry had given the Revenue Authority an overall revenue target of $5.828 billion (UGX 22.3 trillion). This was $810.2 million (UGX 3.1 trillion) higher than the actual revenue collection from Financial Year 2020/2021. Within this period, domestic tax revenue collections registered a shortfall of $248.9 million (UGX 951.3 billion), and a performance of 86.7 percent. The taxman further explained that the shortfalls were from direct domestic taxes (UGX 273.6 billion), indirect domestic taxes (UGX 487.2 billion), and Non-Tax Revenue (NTR) (UGX 190.5 billion).
The secret known is that government of Uganda is experiencing cash flow limitations due to underlying economic challenges majorly because of overwhelming government expenditure. The parliamentary committee recommended that government reduces domestic borrowing, to slow down the ratio of domestic debt to private sector credit, adding that this will ensure that domestic borrowing does not crowd out private sector growth.
SecretsKnown beseeches the government to always consider value for money on different projects and programmes to impede corruption and unnecessary expenditure on borrowed money. SecretsKnown believes that government limiting highly non-concessional and commercial borrowing to only projects with a high economic return and fiscal return will curb down on debt burden.