What explains government’s fondness for Supplementary Budgets which have no impact on GDP growth?

What explains government’s fondness for Supplementary Budgets which have no impact on GDP growth?

In the past 7 months (November 2021-May 2022) government of Uganda has appropriated four supplementary budgets amounting to over UGX 9.138 trillion ($2.538 billion).

Gen. Yoweri Museveni’s regime has over the years exhibited a penchant for supplementary budgets. These supplementary budget appropriations have largely not been done little if not nothing to stimulate demand, thus have been of no impact on GDP growth.

According to the Public Financial Management Act (PFMA), supplementary budgets should only be appropriated in situations where the activities are unforeseeable (such as the Covid-19 outbreak), unavoidable, and unabsorbable within the approved national budget votes. But in Uganda under Gen. Museveni, appropriation of supplementary budgets has become the norm.

The most recent supplementary budget was approved by Parliament on May 20, 2022 with barely 40 days left to the end of the financial year. The value of this supplementary budget is UGX 617.97 ($171.6 million) to finance among other things 3rd June Martyrs’ Day activities, classified expenditure, and Uganda People’s Defense Forces (UPDF) operations in D.R. Congo. The detailed breakdown is as follows:

May 20, 2022 Approved Supplementary Budget

 

Item / Activity

Budget

1

Office of the President to cater for external financing from EXIM Bank for the National Science, Technology, Engineering and Innovation Skills Enhance Project

 

86.3bn

2

State House for classified expenditures

77 bn

 

3

UPDF to facilitate Operation Shujaa in DRC and Shs87.5bn for operations in Karamoja sub region,

64.4bn

4

Ministry of Works for security roads in Karamoja

25 bn

 

5

Ministry of Gender to facilitate election of the Office bearers for the Uganda to facilitate Uganda Muslim Supreme Council

2.5 bn

6

Meeting wage shortfalls under various Central & LG Votes.

251.7bn

7

Fort Portal Catholic Diocese and 

1 bn

8

Greater Ankole Diocese to facilitate preparations for the Uganda Martyrs Day celebrations 2022

0.600 bn

9

procurement & maintenance of diagnostic equipment for Naguru Referral Hospital,

0.18 bn

10

Procurement of two motor vehicles for the Head & Deputy Head of Uganda’s Mission in Cairo,

0.39 bn

11

Land compensation payments to a number of Local Governments

21 bn

12

Facilitate completion of Kayunga and Yumbe Hospitals outstanding project activities.

0.066 bn


By providing UGX 0.600 billion for Greater Ankole Diocese to facilitate preparations for the Uganda Martyrs Day celebrations 2022, government created the impression that going forward, Martyrs Day cerebrations shall be funded by government. This is because all the other Dioceses in Uganda would look forward to government funding to facilitate Martyrs Day celebrations because the precedent has already been set.

Below is the breakdown of the four supplementary budgets amounting to over UGX 9.138 trillion ($2.538 billion) that have been appropriated during the past seven months.

Month

Supplementary Budget Expressed Purpose

Amount (in UGX)

November 2021

Stimulating the economy hit by COVID-19 and security-related interventions.

3.81 trillion

December 2021

To compensate the Church of Uganda for its land taken by the government to expand Entebbe International Airport

21.25 billion

January 2022

To meet the additional expenditure for the financial year 2020/2021.

4.7 trillion

May 2022

Classified expenditure, and Uganda People’s Defence Forces –UPDF operations in Congo.

 

617.97 billion


SecretsKnown has concerns about the utilization of funds appropriated through supplementary budgets. For example, the November 2021 supplementary budget was supposed to finance among other things setting up a COVID-19 vaccine manufacturing plant budgeted at UGX 56 billion ($14.9 million). Until now, taxpayers have not received any update on the progress of this project.

When supplementary budgets are used to finance fixed costs, such as paying salaries, renting office space, procuring vehicles, meeting operation shortfalls, settlement of court awards etc, rather than being used for capital investment, they will have zero impact on GDP growth.

The secret known is that because the conditions governing the appropriation of the supplementary budgets are less stringent, there is a tendency to embed most of the questionable items under supplementary budgets.

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