Log in
Free: The Observer Mobile App - Exclusive Content and Services

Gov't proposes more taxes in 2020/21 budget

Matia Kasaija

Matia Kasaija

Government through the ministry Finance and Economics Development is among others looking at; reducing reliance on debt by increasing domestic revenue and improving the execution rate of projects as some of the ways to sustain the country’s debt.

As at end of June 2019, the stock of public debt amounted to Shs 46.36 trillion ($12.55 billion) of which, the external debt was Shs 30.85 trillion ($8.35 billion). The domestic debt is Shs 15.51 trillion ($4.2 billion). 

According to Finance minister, Matia Kasaija, government’s debt financing strategy for the 2020/2021 financial year involves several commitments that will see the debt sustained. This includes reducing reliance on debt by increasing domestic revenue, improving on the execution rate of projects for timely realization of their returns and subsequently their impact on the economy among others.

The other commitments are prioritizing concessional debt to minimize debt service costs, limiting domestic borrowing to not more than 1 per cent of Gross Domestic Product (GDP) in the medium term and improving the country’s export earnings to enable payment of debt since exports are a key source of foreign currency.  

Kasaija outlines the commitments in the Shs 39.64 trillion budget framework paper for the 2020/2021 financial year. The budget framework paper is awaiting scrutiny by parliament. In the framework paper, the Finance minister sets a new tax revenue target of Shs 21.54 trillion up from Shs 20.4 trillion in the current financial year to enable financing of the 2020/2021 budget.

Another Shs 6.93 trillion is projected to come from external borrowing while Shs 771 billion is budget support loan. Government borrowing from the domestic market is also projected at Shs 2.57 trillion in the 2020/2021 financial year.

Addressing the issue of risks related to public debt, Kasaija says that the proportion of domestic debt maturing in one year reduced to 36.5 per cent of the total domestic debt by June 2019 from 36.8 per cent in June 2018 on account of issuance of longer-dated securities.

“Despite this improvement, the ratio is close to the recommended benchmark of 40 per cent. Additionally, the current practice of rolling over maturing debt implies that government faces a risk of being unable to refinance its maturing domestic debt,” he says.

However, the Finance minister says that to mitigate against this risk, government will continue implementing the strategy of taking on longer-dated securities, while keeping domestic borrowing as low as possible. This year alone, parliament approved loans to a tune of Shs 6.15 trillion, according to the annual performance report of the house. More loan requests are still under scrutiny by the National Economy committee. 

Early this year, the auditor general, John Muwanga warned that although Uganda's debt to GDP ratio of 41 per cent is still below the International Monetary Fund (IMF) risky threshold of 50 per cent and compares well with other East African countries, it is unfavorable when debt payment is compared to local revenue, which is the highest in the region at 54 per cent.  

Comments

+3 #1 Odongkara 2019-12-30 08:25
Look at these leeches of the NRM government! A leech is an aquatic worm with suckers at both ends. Many species are bloodsucking parasites.

Also a leech is a person who extorts profit from or sucks on others, the NRM Mafia they are leeches feeding off the hard-working citizens, habitually exploiting them."
Report to administrator
+3 #2 sula 2019-12-30 08:39
No doubt the bandits are in the final stages of mortgaging the country. Oh God !
Report to administrator
0 #3 kabayekka 2019-12-30 10:48
This seems to be an African government that is determined to stay put in power when it should have resigned a long time ago.

You cannot run a country's economy and continue to cook books of accounts as if it is someone's homestead.

Millions of lives here are at risk if this country does not sit down with the international finance communities and come back to an agreement concerning HIPC for Uganda.

This country has done enough and overspent itself in money by interfering in the internal affairs of many African countries for many years now.

The Buganda committee against national rigged elections in this country is very much at the forefront of such negotiations so that this country can start to follow a modern emergency economic austerity schedule.
Report to administrator
0 #4 rubangakene 2019-12-30 20:56
All the money has been siphoned of to far-off shores by Ugandans (mafuta mingii) and their co-conspirators posing as "inward investors"; you deal with it now.

You went 'possum' (feigned ignorance) while this occurred during your (NRM) watch, now deal with it and don't let ordinary Ugandans suffer.

Imagine all the money in Panama, Jersey and Guernsey Islands, Seychelles, Mauritius, big bulidings and hotels in London and Europe; that is our money, all you got to do is go and collect if you have the "balls"!
Report to administrator
0 #5 kirya 2019-12-30 22:45
More taxes to maintain m7 and his family of thieves!
Report to administrator
0 #6 MuwangaTheUgandan 2019-12-31 13:40
Quoting kabayekka:
Millions of lives here are at risk if this country does not sit down with the international finance communities and come back to an agreement concerning HIPC for Uganda.


Mine is a response to HIPC. HIPC is a debt relief programe which has a good underlying theory.

The problem is in practice countries like Uganda have to implement SAPs which economist analysts have criticised as bad for poor economies.

Some of these SAPs encourage foreign investment and deregulation where foreign investors get tax breaks and profit guarantees. How can a poor country in need of relief provide such guarantees?

Plus this stiffles the ability of local investors to grow as they will always be outcompeted by the "guys that dont pay taxes and have guaranteed profits". That is just from 2 SAPs.

Read about the implications and structure of debt relief from various analysts.
Report to administrator
0 #7 Odongkara 2019-12-31 22:54
Quoting kirya:
More taxes to maintain m7 and his family of thieves!


Absolutely true and they will vomit it when the 40th day comes upon them.

Who imagined Field Marshal Idi Amin Dada would flee Ugandan soil and be buried outside of it? What will be the fate of a junior officer, General Museveni? Just wait and see.
Report to administrator

Comments are now closed for this entry