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CSO Flags Concerns Over FY 2024/25 National Budget, Citing Escalating Debt and Fiscal Indiscipline

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By Gad Masereka

In a press conference held today at PELUM Uganda Offices in Ntinda, Jeff Wadulo, a policy and programs adviser, spearheaded a team of Civil Society Organizations (CSOs) under the umbrella of the Civil Society Budget Advocacy Group (CSBAG). The focal point of the conference was to address the CSO perspectives on the National Budget Framework Paper for the financial year 2024/25.

Tabled by the finance minister on December 13, 2023, the National Budget Framework Paper boasts the theme “Full Monetization of the Ugandan Economy through Commercial Agriculture, Industrialization, Expanding and Broadening Services, Digital Transformation, and Market Access.”

Commendations were offered by the CSOs for the government’s efforts to rejuvenate the economy, acknowledging the disbursement of UGX 2.77 trillion in affordable credit to private sector businesses and notable progress in various development projects. The economy exhibited a commendable growth of 5.2% in FY2022/23, with a projected further growth of 6.0% by the end of FY2023/24, buoyed by various sectors and foreign direct investments.

However, the CSOs voiced substantial concerns about critical issues such as the escalating public debt levels, fiscal indiscipline through supplementary budgets, under absorption of funds in pivotal projects, poor performance in tax revenue collection, and dwindling donor support.

Key Concerns Highlighted by CSOs:

Soaring Public Debt Stock: The CSOs raised alarm over the total public debt, which stood at UGX 96.168 trillion as of June 30, 2023, reflecting a worrying increase of UGX 9.329 trillion (10.74%) in just one year.

Fiscal Indiscipline: Concerns were raised about the approval of supplementary budgets, with a portion going towards recurrent expenditures, indicating poor planning practices within Ministries, Departments, and Agencies (MDAs).

Under Absorption of Funds: The CSOs highlighted challenges in the implementation of critical projects, such as UGIFT and USMID, due to procurement irregularities, late disbursement of funds, and underfunding.

Poor Tax Revenue Collection: The CSOs pointed out the underperformance in tax revenue collection, particularly in taxes on international trade and indirect domestic taxes.

Shrinking Donor Support: The recent decision by the World Bank to halt new loans to Uganda and the withdrawal from the African Growth and Opportunity Act (AGOA) pose significant challenges to the country’s economic development.

The projected resource envelope for the fiscal year 2024/25 is UGX 52,722.68 billion, reflecting a decline of UGX 14.10 billion from the approved budget for FY 2023/24. The CSOs expressed concerns about the reduction in the discretionary resource envelope, largely due to increased debt service obligations.

CSO Concerns in the FY 2024/25 National Budget Framework Paper:

Increased Government Expenditure Biased Towards Recurrent Expenditure: The CSOs highlighted the projected increment in recurrent spending, which threatens development and sustainability.

Insufficient Enforcement Mechanisms for Domestic Arrears: Despite efforts to eliminate domestic arrears, the CSOs noted a surge of 62% within a year, emphasizing the inadequate allocation of UGX 217 billion for clearing arrears.

Persistent Underfunding of the Agro-Industrialization Program: The CSOs expressed concern about the inadequate budgetary allocations and donor dependency, suggesting a need for increased investment in activities that add value to Uganda’s agricultural commodities.

Limited Investment in Primary Health Care: The CSOs recommended an increase in the Primary Health Care budget to enhance people’s physical and mental health and address the challenges faced in community health interventions.

Challenges in Implementation of New Teaching Lower-Level Secondary Curriculum: The CSOs called attention to the insufficient increase in the recurrent non-wage budget for the National Curriculum Development Centre, hindering effective implementation of the new lower-level secondary education curriculum.

Insufficient Allocation of Funds for Disaster Preparedness: The CSOs urged the Ministry of Finance to allocate at least 0.5% of the previous year’s budget as a contingency fund to manage disaster response.

Limited Capacity of Land Management Institutions: The CSOs recommended allocating at least 20% of the total revenue generated through land transactions to support systematic formalization and registration of land rights.

Poor and Uncoordinated Funding for Community Mobilization: The CSOs highlighted the persistent underfunding of community mobilization efforts, emphasizing the need for increased allocation for recruitment of staff.

Inadequate Funding to the Uganda National Bureau of Standards (UNBS): The CSOs raised concerns about the underfunding of UNBS and proposed an increased budget to strengthen its standards role.

In conclusion, the CSOs acknowledged the challenges ahead in the fiscal year 2024/25 but expressed optimism in overcoming obstacles through government commitment, resilient citizens, and robust partnerships with civil society and development partners. The CSOs reiterated their dedication to fostering constructive engagement, transparency, and accountability for fair development.

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