Kampala, Uganda – Government will announce a cut of billions of shillings off travel and conferences and ensure that ministries, departments and agencies become efficient as it faces limited funding to run the 2020/21 financial year budget to be read on Thursday.
Also, the government will seek to use agriculture as a resilient sector that will anchor the country’s growth next financial year as uncertainty over coronavirus crisis lingers on.
Margaret Kakande, the head of the Budget Monitoring Unit (BMAU) at the Ministry of Finance said the government will step back on sectors like tourism, giving it limited resources because it is now next to impossible to attract any visitors.
The tourism sector will be allocated 197 billion Shillings, a slight improvement from 193 billion Shillings in the 2019/20 financial despite it being the most battered by the effects of COVID-19. Kakande said that the government has cut billions off all ministries’ travel budget both for inland and foreign trips.
This started early from April with most agencies having their travel budgets cut to ‘zero’. Kakande said this will continue with the new financial year. Travel for different officials takes more than 100 billion Shillings in a particular financial year.
The budget which is expected to be at least 45.5 trillion Shillings will look to address three things – support the recovery from the coronavirus crisis, disaster-prone areas and then bear in mind of the 2021 general election.
Finance Minister Matia Kasaija will announce the biggest allocations to works and transport, security, interest payments, education and health in that order.
Works and Transport in particular will be allocated 5.8 trillion Shillings accounting for 12.5 percent of the budget. This is a slight drop from the 6.4 trillion Shillings the sector got in the 2019/20 financial year. Still it taking the biggest chunk is an indicator that the government hasn’t moved away from its focus on roads despite having a health pandemic. Kakande said some of the projects have been committed and it’s a legal obligation that the government continues paying them.
Security will be allocated 4.5 trillion Shillings but much of this money is classified. Interest payments, the money government pays to lenders for lending their money will be 4 trillion Shillings up from 3 trillion Shillings last year while the Health sector will get 2.7 trillion Shillings a slight improvement from the 2.5 trillion in the 2019/20 budget.
Kasaija will also announce a wide range cut in taxes in the push to recover from the coronavirus crisis but also appear to appease the 2021 general election voters. These include most agriculture inputs, cooking gas and processed milk.
Allan Mugisha, an auditor at Ernst and Young, said some of these cuts are good for the environment and boost the agriculture production. Of interest in the budget will be the source of funding. Kakande said domestic taxes and international taxes have been cut by the closure of businesses, borders and limited consumption.
She said they don’t expect a lot of grants from donors as their own countries are also suffering from coronavirus impact.
The major source of funding will be borrowing, she said. According to figures presented by Ernst and Young, the government will borrow up to 11 trillion Shillings from external sources for the 2020/21 budget. It expects grants of 1.7 trillion Shillings.
The money will go to both budget and project support. The government hopes to raise 33 trillion Shillings from domestic sources.