Public debt: Each Ugandan to pay Shs 1.7m to clear it

Uganda’s public debt has reached an alarming level. To clear the burden, each of the 45 million Ugandans will need to make a one-off contribution of at least Shs 1.7 million.

According to the recently passed budget committee report for the financial year 2023/24, Uganda’s total public debt stands at a staggering Shs 80.7 trillion. Of this amount, Shs 47.7 trillion constitutes external debt, while Shs 30 trillion is domestic debt.

To finance the upcoming financial year’s budget of Shs 52 trillion, Uganda will need to borrow an additional Shs 6.16 trillion on top of revenue collections. While the country’s debt is deemed sustainable in the medium and long term, there are vulnerabilities highlighted by Patrick Isiagi, the chairperson of the budget committee.

Isiagi emphasizes the increasing debt service burden and the risk of export shocks as significant concerns. He calls for the government to exercise caution in contracting future debt to maintain sustainable levels.

Leonard Okello, a policy expert and CEO of The Uhuru Institute, raises important points regarding Uganda’s borrowing practices. He suggests that political interests and the projectization of government programs influence borrowing decisions, often leading to misappropriation.

Okello expresses concern that borrowed funds are frequently squandered by the political class, resulting in extravagant spending and double financing. This situation ultimately impacts critical sectors like health and education, hindering service delivery.

“We borrow to almost do every major project, yet the money is being squandered by the political class who want to score political mileage. Almost every government entity is duplicated in State House. This is extravagance and double financing which comes at the cost of better service delivery in critical sectors like health and education,” he said.

Okello emphasizes the importance of assessing the necessity and absorptive capacity before borrowing. He also highlights the ongoing audit of government workers to identify and eliminate ghost workers, which could reduce administrative costs.

LUXURIOUS WAY OF LIFE

“Before borrowing money, the government should establish whether there’s a need for borrowing and whether they can absorb the borrowed money. Borrowing has no effect if we don’t cut down on our luxurious way of life. I am hoping that the ongoing audit of government workers shall weed out ghost workers and reduce the cost of administration,” he said.

The government has faced criticism in the past for its low absorption rate of loans, attributed to poor project implementation. Failure to utilize loans in a timely manner incurs unnecessary penalties and repayment costs.

Budget estimates for the financial year 2023/24 reveal a significant allocation of Shs 17 trillion for debt service obligations. However, the State House and the Presidency have a combined budget allocation of Shs 500 billion, while the ministry of Health receives a mere Shs 113 billion.

These figures have drawn the ire of Dr Herbert Luswata, the secretary general of the Uganda Medical Association. Luswata expresses dismay at the continued inadequate allocation of resources to the health sector, highlighting Uganda’s failure to meet the Abuja declaration.

The declaration, signed during an April 2001 meeting in Abuja, Nigeria, commits African Union member countries to allocate 15 per cent of their government budgets to health.

The burden of Uganda’s public debt and the consequent allocation of resources remain pressing issues. Urgent action is needed to address the country’s debt situation and ensure that crucial sectors receive adequate funding to provide essential services to the population.

In response to the ongoing agitations by medical interns for deployment, Dr Herbert Luswata, expressed his concerns. He revealed that a meeting was held with Dr Diana Atwine, the permanent secretary of the ministry of Health, on Wednesday, May 17, 2023.

During the meeting, Dr. Atwiine promised that the allowances of medical interns and senior house officers worth Shs 80 billion would be considered in the upcoming financial year. However, the budget estimates presented to parliament the following day did not include these allowances, leading to disappointment among the medical community.

Dr. Luswata criticized the government, stating that it cannot claim a lack of funds when other individuals were allocated similar amounts.

The absence of interns and senior house officers from work has significantly impacted access to medical care in many hospitals. Additionally, specialist doctors are currently on strike over a salary gap amounting to Shs 21 billion. Without specialists available, the provision of medical services is severely hampered.

To resolve the situation, Luswata emphasized the need for written commitments from the government to address the concerns of both specialists and interns.

“At the moment, the specialist doctors are also striking over their salary gap amounting to Shs 21 billion. Without specialists in the hospitals, so little can be done. We agreed that for the specialists to resume work, the government should commit in writing. We are still waiting for it as well as another on the pending deployment of medical doctors,” he said.

Luswata highlighted the shortage of specialists in Uganda, stating that despite the country’s target of having over 2,000 specialist doctors, there are currently only 350 specialists available. He called on the government to allocate Shs 100 billion to address the concerns raised by the medical community.

While infrastructure development is important, he stressed that it is equally crucial to allocate specialists and supplies to regional hospitals to ensure their effective operation. The health sector, he emphasized, should be a top priority, and not an afterthought.

“Let the government set aside Shs 100 billion to address our concerns. Although it is good to have nice infrastructure at most of our regional hospitals, the good structures can only make sense if we can allocate specialists and supplies to these hospitals. The health sector is an essential part of Uganda that shouldn’t be an after-thought,” he added.

INDISCIPLINE

Agaba Marlon, the spokesman for the Anti-Corruption Coalition Uganda, raised concerns about budget discipline among Ugandan technocrats involved in the budgeting process.

He criticized the frequent emergence of supplementary budgets, often originating from security and the State House, which divert previously allocated funds. This lack of budget discipline affects the proper allocation of resources and hinders the budget from serving its intended purpose.

Marlon further noted that corruption at the budgeting level is a significant issue, with interests and individuals involved in diverting funds. He echoed the sentiments of the Speaker of Parliament, who recently expressed concerns about the budgeting process being hijacked.

“We have a lot of supplementary budgets coming up two or three-months after passing the budget and most of them come from security and the State House. When such budgets come up, it does not mean that there is new money, but money earlier programmed will be diverted and given to other entities,” he said.

Most districts get 70 per cent of their budgets because their money is allocated to other entities in the form of supplementary budgets; so, we lack budget discipline.

“Corruption is another issue that hinders our budget from serving its purpose. Corruption starts at the budgeting level. Recently the speaker cried out that the budgeting process is being hijacked because there are so many interests and people involved. They allocate money to an entity knowing that, that is where they are going to swindle it from,” he said.

Marlon emphasized the need for prioritization to ensure that Ugandans can benefit from their tax contributions. He mentioned that the minority report brought the budget of the State House and a few other agencies in line, highlighting un-necessary expenses such as buying clothes for the president.

Marlon argued that such funds could be better allocated to sectors like health, education, and the ministry of Works, as they contribute to the development of the economy.

The issues raised by medical professionals and civil society representatives under- line the urgent need for effective budget management and allocation of resources to address critical areas such as healthcare and infrastructure development.

Interviewed on May 22, Lawyer Luyim- bazi Nalukoola said Ugandans have the liability that comes with a president who has overstayed in power. There is nothing like rise and rise, there is rise and fall. Uganda will suffer administrative costs in budgeting processes.

“One of the conduits through which money is being spent is State House. Every other time, there is a supplementary budget and classified expenditure from the State House. The State House will continue eroding money that would have been given to other entities and sectors like the ministry of Health, education, and other sectors. The same sectors must suffer because of State House,” he said.

He added, “It is unthinkable that we are in a country where the government borrows to pay civil servants”.

CORE MANDATES

In an earlier interview with The Observer, Julius Mukunda, the executive director of the Civil Society Budget Advocacy Group (CSBAG), said, “To run away from the budgeting process, most government agencies no longer budget for their core mandates in anticipation of supplementary budgets as classified expenditures”.

“Ninety per cent of the money we spend as supplementary expenditures doesn’t qualify as supplementary budgets. A supplementary budget should be unavoidable, but almost everyone now needs one. Since supplementary budgets distort the entire planning process, they should be for emergencies only. There’s no expense in a budget that requires a supplementary budget. These are planned-for expenses that can always be considered in the financial year budget,” Mukunda said.

In their June 2022 report that shined a bright light on supplementary budgets, the Alliance for Finance Monitoring, a non-governmental organization that follows money in politics, reported that the government of Uganda had appropriated four supplementary budgets worth Shs 9.138 trillion ($2.538 billion) between November 2021 and May 2022.

“The known secret for the large appetites for supplementary budgets is that the conditions governing the appropriation of the supplementary budgets are less stringent. Most of the questionable items are embedded in supplementary budgets. When supplementary budgets are used to finance fixed costs like paying salaries, renting office space, etc. rather than capital investment, they have zero impact on GDP growth,” their report read in part.