african news


Government’s Financial Strategy: Breaking Free from Ongoing Borrowing

The Finance Minister, Matia Kasaija, emphasized that the government cannot endlessly borrow to meet ongoing financial requests, some of which can be deferred, delayed, or eliminated. Addressing a pre-budget dialogue organized by the Civil Society Budget Advocacy Group for the 2024/25 financial year, Kasaija stated that he refuses to borrow indefinitely to jeopardize the country’s financial stability. He acknowledged the constant influx of new demands during Cabinet meetings but stressed the need to prioritize, stating that not all requests are urgent or essential.

Kasaija responded to concerns raised by civil society organizations regarding the growing public debt, which poses challenges to the economy amidst low tax revenues. He highlighted the persistence of supplementary budget requests over the past decade, despite the government’s previous commitments to eliminate such practices due to their contribution to increased borrowing and, consequently, a rise in public debt.

As of June 2023, the Auditor General, John Muwanga, reported a significant increase in public debt, reaching Shs96 trillion. Of this, Shs43.6 trillion (45.4 percent) was domestic debt, and Shs52.4 trillion (54.6 percent) was external debt. The escalating public debt continues to strain domestic revenue, projected to decrease from Shs25.2 trillion in the 2023/24 financial year to Shs21.7 trillion in the 2024/25 financial year.

Debt servicing, a major budget allocation, is expected to rise to Shs3.2 trillion in the 2024/25 financial year from Shs2.6 trillion, diverting funds away from priority sectors of the economy.

Kasaija also addressed criticism from some government officials who label him a “miser” for rejecting certain supplementary requests. He stressed the inevitability of financial constraints, emphasizing the importance of prioritizing sectors with significant economic impact, acknowledging that money, no matter how much, will never be sufficient for every sector.

The government has identified key priority sectors for the 2024/25 financial year, including investments in people, infrastructure (roads), peace and security, electricity generation and transmission, and effective management of natural disasters. Kasaija attributed fiscal indiscipline to ministries and government entities that fail to effectively utilize allocated funds, emphasizing the need for responsible financial management.

Julius Mukunda, the Executive Director of the Civil Society Budget Advocacy Group, expressed concern about the economic impact of growing debt, urging the government to address issues such as careless borrowing and spending. He emphasized the potential for savings in areas like domestic and international travel, entertainment, and welfare.


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