KAMPALA – Legislators on Parliament’s Budget Committee have expressed concerns on the 2020/21 national budget reliance on loans and donor aid.
The MPs’ concerns are contained in the 2020/21 Appropriation Bill 2020 with the Committee report highlighting the total domestic revenue including that of local government in the FY2020/2021 being just 48.2% of the total resource envelope. The balance of 51.8% are resources from borrowings and development assistance funds.
“This situation is very worrying and could indicate that our fiscal operations may not be sustainable in the medium term,” noted part of the report.
The development comes at the time, government realised shortfall in external financing releases in 2019 where a total of Shs3.764T was released
against a target of Shs4.716T as by end of December 2019, registering
a performance of 79.82%.
The shortage in releases were further hampered by the low absorption of external finances, that stood at 49% of the donor funds utilised by government
representing a weak budget execution as at end of December 2019
Government attributed the poor budget execution on mainly challenges in project executions that resulted into delays in disbursement of funds from
The Committee called on government to improve project selection, design, appraisal and analysis before the
project is approved and sanctioned for funding.
The projected resource envelope for the 2020/21 national budget is estimated at Shs45.149T which is an increase of 12.36%. The Total domestic resources will constitute 72.5% while external funding will constitute 27.5%.
Works and Transport has witnessed budget cuts to Shs5,846b from Shs6,404.60b the sector received in 2019, Security will receive an increment from Shs3620.80b in 2019 to Shs4504.68b, while Government has increased allocation to Interest payments from Shs3,145b in 2019 to Shs4.086T in 2020.
The Education was allocated Shs3.397T in 2019 and that budget will increase to Shs3.624T in 2020 and same increment will be witnessed in Health sector from Shs2.589T in 2019 to Shs2.772.9T, yet Energy and Mineral Development sector will witness budget cuts from Shs 3.007T in 2019 to Shs2.602T in 2020.
The Accountability sector received Shs1.627T in 2029, and this will increase to Shs 2.106T in 2020 and the same increment has been extended to Justice/Law and Order from Shs1.732T in 2019 to Shs2,025T in 2020.
Local Government Sector was allocated Shs1.260T in 2019 and the budget was increased to Shs1.752T in 2020, while Water and Environment Shs1.092T allocation in 2019 had been increased to Shs1.681T in 2020, the same with Agriculture whose 2019 Shs1.053T budget has been boosted to Shs1.324T in 2020.
Government allocated Public Administration Shs979.1b in 2019 and this has been increased to Shs1.321T in 2020, Legislature will witness budget cuts from Shs687.8b in 2019 to Shs667.8b in 2020, Public Sector Management budget will also be reduced from Shs887.8b in 2019 to Shs 675.182b in 2020, although Science, Technology and Innovation will have it’s budget increased from Shs186b in 2019 to Shs264.5b in 2020.
The Lands, Housing and Urban Dev’t sector was allocated Shs227b in 2019, and this budget has been further trimned to Shs200.6b in 2020, yet Tourism sector will have its budget increased from Shs193.7b in 2019 to Shs198.028b in 2020, Social Development that received Shs219.2b in 2019 will have it’s budget further reduced to Shs172.2b in 2020.
Sectors of Trade and Industry was allocated Shs202.8b in2019, but this budget will be reduced to Shs171.8b in 2020, while ICT & National Guidance had it’s budget revised upwards from Shs146.2b in 2019 to Shs162.9b, bringing total sectoral allocations to Shs32.661T.
Additionally, Government allocated External Debt Repayments Shs723.32Bn in 2019, and in 2020, Shs1.228.94 has been set aside for loan repayment. For Domestic Refinancing, Government has allocated Shs6.452Trn in 2019, and in 2020, Shs7.486.14Trn has been allocated, which accounts for lion share of 16% of the budget
Government allocated Shs449.53Bn in 2019 as payment for domestic Arrears but in 2020, the allocation has dropped to Shs400Bn
Appropriation in Aid (AIA) was allocated Shs201.11Bn in 2019, and in 2020, Shs215.59Bn was allocated, bringing total allocation national budget allocation to Shs45,493.73Trn.