Economists caution against unrestrained gov’t spending

Summary:

• Experts urge Uganda to reconsider budget strategy, citing concerns over excessive spending, frequent supplementary budgets, and challenges in revenue collection, emphasizing the need for frugality and efficient resource management.

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Budget experts are urging Uganda’s economic managers to reassess the implementation and financing strategy of the national budget, expressing concerns about lavish government spending and frequent supplementary budgets. The Finance Ministry’s inquiry into a Shs600 billion revenue deficit from July to October has heightened worries. Julius Mukunda, the executive director of the Civil Society Budget Advocacy Group (CSBAG), emphasizes the importance of government frugality given declining revenue targets. He calls for stricter regulation of supplementary estimates, citing concerns about unjustified budget increases and potential corruption.

CSBAG’s analysis attributes most supplementary budgets to poor planning and competence issues, raising suspicions of questionable financing strategies. Mukunda stresses the need for prudent resource management to achieve service delivery and poverty eradication goals outlined in the Shs52.7 trillion budget for the next financial year.

Mukunda highlights challenges in revenue collection, noting that only around 10 percent of the 3.2 million people on the tax register regularly pay taxes, citing economic difficulties and the rising Central Bank Rate affecting private sector borrowing costs.

While the government aims to fund the budget through enhanced revenue collection and controlled borrowing, Mukunda underscores the importance of budget discipline, frugality, and efficiency optimization. He believes prioritizing these aspects will contribute to a more effective and sustainable financing strategy for Uganda’s national budget.