Parliament has passed a shs29 trillion budget for the financial year 2017/2018 beating the May 31st deadline stipulated in the Public Finance Management Act.
The House sitting on Wednesday, 31st May 2017 chaired by the Rt.Hon. Deputy Speaker, Jacob Oulanyah approved the budget which will be presented to the nation on 08th June 2017.
Presenting the report of the Budget Committee, the Chairperson Hon. Amos Lugoloobi said that the budget will focus on increasing agricultural production for food security and strategic exports, enhancing private sector development and intensifying energy and transport infrastructure development.
“The budget will also focus on completing oil related infrastructure development, intensifying the fight against corruption and boosting domestic revenue mobilisation among others,“ he said.
The Committee was also concerned about the increasing debt burden which is accelerated by the continued borrowing for development.
“Government continues to contract public debt in order to finance infrastructure gaps. At the end of 2016, Uganda’s total public debt stock was US$8 billion of which US$5.4 billion is external and US$3.2 is domestic debt,” Lugoloobi said.
The Chairperson added that out of the total budget of Ugshs29 trillion for the next financial year, only Ugshs12.9 trillion is available for discretionary spending with the other Ugshs16 trillion for debt servicing and project support.
“The current public debt situation for the country is unsustainable. This makes the country highly vulnerable to the extent that the budget can no longer adequately provide for basic services and re-capitalisation of vital enterprises and financing of local governments,” the Committee noted.
However, before the budget was passed, there was a heated debate on the Floor of the House as Members of Parliament expressed reservation over the shs4.9 trillion that was reflected in the domestic debt financing.
Hon. Cecilia Ogwal expressed concern over the Ugshs4.9 trillion, which is above the 10 percent maximum that is provided for under domestic borrowing.
Following consultations among the MPs and the Finance Minister, Hon. Matia Kasaija, resolved that the Ugshs4.9 trillion is classified as deficit financing.
Presenting the minority report, Hon. Cecilia Ogwal said that excessive domestic borrowing crowds out the private sector and contributes to the high prevailing commercial bank rates.
“The impact of the high lending rates constrains private sector growth and hence economic development,” Ogwal said.
The Dokolo District Woman Representative also added that out of the 15 oil roads under Uganda National Roads Authority, only two had undertaken feasibility studies and had designs.
She demanded that funds appropriated to the other 13 roads be re-allocated to other sectors since there is no basis for committing funds.
“The total of Ugshs705 billion should be re-allocated from the oil roads without feasibility studies and detailed designs to fund other priority budget items,” the Minority report stated.
The transport and works sector was allocated Ugshs4.6 trillion, education Ugshs2.4 trillion, agriculture Ugshs863 billion, health Ugshs1.8 trillion and security Ugshs1.4 trillion.