Uganda Parliament makes tough decisions on 2013/2014 budget

The parliamentary budget committee has completed its constitutional mandate of assessing the proposed draft budget for the 2013/2014 financial year which the Government will present to the nation next month. The report was tabled in Parliament on Wednesday.

Uganda budget

Section 11 of the Budget Act empowers Parliament to analyse programmes and policy issues that affect the national budget and the economy and, where necessary, recommend alternative approaches.

In their committee report, a copy of which New Vision has received, the MPs have made tough recommendations, one of which is the need to introduce more taxes to cushion the funding gap that has been created by the withdrawal of budget support from the development partners and failure of URA to get sufficient revenue collections. The report shows that external budget support has declined by 93% from sh749b to only sh49b.

Besides the taxes which have proposed in the draft budget, the committee recommends that other taxes on cigarettes and alcohol be introduced to generate more revenue.

The committee, chaired by Kyamuswa County MP Tim Lwanga, has also sanctioned the taxes which the Government has proposed on processed fish, processed milk, fuel, domestic water, motor vehicle registration, motorcycle registration, 1% levy on the gross income of telecoms, international calls and mobile money transactions.

The report, which has now been sent to the President and his executive for more adjustments, also recommends that the Government does whatever it takes to find money to cater for the 20% salary enhancement of teachers as it had promised last year.

As Parliament goes on recess this week, it will reconvene on June 6, 2013 for the President to give his state of the nation address and again on June 14 for the national budget for the 2013/2014 financial year to be read.

The committee has rejected the Government proposal of allocating sh10b to the Presidential Initiative on Banana Industrial Development (PIBID) which has so far taken over sh50b but leaves a lot to be desired in showcasing value for money as the Auditor General’s reports have indicated.

The committee notes that earlier  projections of GDP growth have been revised downwards from the 5.4%, which the Government projected while reading the budget for this current year, to 4.1% for the next 2013/2014 financial year.

“The committee feels the economy is heading towards a recession. The Government may consider implementing measures to stimulate economic growth back to the National Development Plan of 7.3% per annum,” the committee recommended.

The committee is concerned that the domestic revenue to the GDP ratio has stagnated at only 13.0% and with the withdrawal of the donor support, the Government is headed for tough times.

Raising concern over poor service delivery partly due to high rate of corruption, the committee report advises government to initiate reforms to address the governance and financial management systems by instituting stringent controls over budget execution and strengthening cash management by introducing a treasury single account.

The total budget estimate for the next financial year stands at sh12trillion (sh12,005.4b) out of which sh8,843.4b is expected from domestic revenues, sh49.6b from external support, sh2,332.6b from project support and sh779.8b from the domestic banking system. The overall available resources will amount sh11,695.74b.

If money from external sources is excluded, the money available for the next financial year is sh9,363.09b from which sh908.5b will be used on interest payment to service our external and domestic debt obligations.

It raises concern that contrary to the 2003 Maputo Declaration, African governments committed to allocate not less than 10% of their national budgets to agriculture and the NRM caucus resolution of 2012 that agriculture would be given 7% of the national budget, it is getting only 3.4%.

The committee wants the Government to provide additional sh25.75b over and above the current proposed sh9b for 2013/2014 for seedlings, fertilisers and pesticides to be given to the farmers.

The budget committee has also recommended that government provides an additional sh25b to facilitate the promotion, acquisition and utilisation of agricultural mechanisation technologies for increased production and productivity.

The committee also backed the plan by government to establish tight measures for saving wasted public funds within government ministries, departments and agencies to save sh33.28b.

Government’s priorities for the 2013/2014 financial year in the importance include maintenance of national security and defence, infrastructure development in transport and energy, enhancement of science, technology and innovation for industrialisation, competitiveness and employment, enhancing agricultural production and increased productivity; human capital development, and strengthening institutional governance and public service delivery.

According to the draft budget for 2013/2014, the budget for security will be increased to sh1045.9b from the sh945.1b which was approved in the ending financial year.

The energy and mineral development sector budget will also be increased from the 1481.8b for the current financial year to sh1762.2b in the forthcoming financial year.

The budget for the health sector will also be increased from sh852.2b to sh930.5b but the education budget will be reduced from sh1592.5b which was approved for the current year to sh1555b in the 2013/2014 budget.

Other key sectors whose budget has been reduced are the agriculture sector which has been allocated 3.3% (384.2b) of the national budget compared to the 3.5% it got in the current year.

The tourism, trade and industry sector has been reduced from the sh72.5b it got in the current year to sh51.2b in the forthcoming financial year.

The budget for the works and transport sector has continued to take the lion’s share of the national budget (15.1%) with an allocation of sh1769.7b which is higher than the sh1650.7b it got in the current year.

The water and environment sector’s budget has been increased to sh382.3b from sh354.1b it got for the ending year.

Public sector management budget also increased from sh1044.5b to sh1121.1b and public administration budget increased from sh238.8b to sh357.3b.

The information and communications technology budget has slightly reduced from sh15.5b to sh15.3b while the budget for parliament has remained the same at sh235.4b despite previous demands for it to be increased.

The social development budget has reduced from sh58b to only sh26.3b for the next financial year and the accountability budget has also been reduced from sh580.1b to sh539.8b in the next budget.

The budget for justice/law and order has also increased from sh537.6b it got this ending year to sh551.5b.

A special fund of sh20b has been created in the 2013/2014 budget for the restocking programme in Teso, Lango, Acholi and West Nile.

By Moses Mulondo, The New Vision