Despite a huge debt burden that Uganda is currently experiencing, government will continue borrowing very much in order to finance its annual budget.
The minister of state for Finance, Planning and Economic Development Amos Lugoloobi while addressing journalists about the implementation of the 2021-2016 NRM manifesto, said that borrowing is inevitable because government plans to only raise UGX 28 trillion from taxes and non-tax sources yet the total budget for 2023/2024 fiscal year is at Shs48 trillion.
The budget deficit of UGX 20 trillion according to the minister will be financed through borrowing. However he said that citizens should not get worried because the debt is still manageable because it’s within the required standard margins.
“We can’t avoid borrowing but we just need to ensure that the country’s Gross Domestic Product (GDP) is growing and this can enable us to go in for concessional loans for debt financing of our budget.” Minister Lugoloobi stated.
He adds, ” We can curtail our appetite for borrowing in order to reduce the fiscal deficit by enhancing on the tax base through revisiting the tax regimes and removing some of the tax holidays and exemptions in order to enhance the tax base.”
The minister further said that the public debt is now kept at 48% of the country’s GDP and it’s still below the commitment of the charter of the fiscal responsibility of 50% which is the sustainable level.
In the fiscal year ending 2022/2023, Uganda’s debt burden is standing at… but it’s expected to rise beyond that percentage.
Hon Lugoloobi also gave an overview of the status of the economic performance where he said that, the economy grew by 4.6% in FY 2021/22 and over the first quarter of the current financial year, the economy grew by 7.5 % compared to 2.7% in the same quarter of FY 2021/2022.
This was attributed to the increased value addition in both industry and service sectors which grew at 12.7% and 9% respectively. Well as the economy is projected to grow at a rate of 5.5% by the end of this financial year.
The improvement in the industry and service sectors also help to narrow Uganda’s trade deficit with the rest of the world to US$ 241.93 million from US $ 297.66 million registered in February 2023. In EAC, Uganda had a surplus of US$ 15.9million of the volume of trade.
Although the country is experiencing a huge challenge of unemployment especially among the youth, hope is not lost because there has been an increase in formal jobs from 1,380,972 in 2020/21 to 1,422,857 employees in 2021/2022.
by George Bukenya