Parliament has authorised Government to increase domestic borrowing by Shs736 billion from the domestic financial market to finance the next financial year budget for 2018/2019.
The motion to borrow the money was tabled by the Minister of Finance, Planning and Economic Development, Matia Kasaija, during the House sitting chaired by the Deputy Speaker, Jacob Oulanyah, Thursday, 29 March, 2018.
Kasaija told the House that expenditure pressures have exceeded the 3 percent of the appropriated budget in the current financial year.
“Some of these expenses cannot wait until the next financial year,” said Kasaija.
The Minister gave an example of the need to compensate people affected by on-going developmental projects.
He said that failure to compensate, contractors will lay down their tools and that this will have negative implications on government.
He said when contractors lay down their tools, projects stall, the economy will not benefit from the project and government will incur more costs.
“An example is when government was forced to stop construction of the Entebbe-Express highway for six months and the contractor threatened to bill government US$60 million,” said Kasaija.
Kasaija noted that given the time constraints and the lengthy procedures involved in external financing, the only viable option is for government to source extra borrowing from the domestic market.
The Chairperson of the Committee on National Economy, Syda Bbumba said that the shortfall in revenue was a major reason for reverting to domestic borrowing.
“Government should increase sources of tax revenue through a combination of measures for improvement on tax efficiency, widening the tax base and providing an environment that is conducive for growth of the private sector,” said Bbumba.