The government of Uganda made significant last-minute changes to the national budget for the Financial Year 2024/25, increasing the total budget from Shs58.34Trn to Shs72.12Trn. The sudden changes have raised eyebrows among economists and citizens, sparking questions about the motivations behind the revisions.
Sources close to the Ministry of Finance reveal that the government was compelled to make the changes in response to pressing financial distress and security concerns. The revised budget allocates a substantial Shs30.95Bn to pay emoluments for cultural leaders, a move seen as a nod to the importance of cultural heritage and national unity. Additionally, a Shs25Bn injection will be made to capitalize Vision Group, a media company facing financial difficulties.
The Ministry of Defence and Veteran Affairs has also received a significant boost, with Shs172Bn allocated for the purchase of food for soldiers, Shs230.16Bn for the purchase of equipment, and Shs214.62Bn for payment of wages and gratuity. These allocations demonstrate the government’s commitment to supporting the country’s security forces and ensuring their well-being and effectiveness.
However, despite the repeated cries from citizens and stakeholders about the deplorable state of the country’s roads, very little has been allocated to the sector. A meager Shs500Bn has been allocated for road maintenance and development, a figure that falls far short of the estimated Shs2Trn needed to address the country’s road infrastructure challenges.
Parliament has approved a Shs288.624 billion supplementary budget to bankroll four items for the 2023/2024 Financial Year, which will close in less than two months. This makes it the third supplementary budget cleared in the current financial year, following the first and second ones worth Shs3.492 trillion and Shs1.101 trillion, respectively.
Out of the approved Shs288.624 billion, Shs132.634 billion will go towards the Uganda National Oil Company (Unoc) for shares in the East African Crude Oil Pipeline. Additionally, Shs152 billion is planned for the construction of Hoima City Stadium by the National Council of Sports in preparation for the 2027 African Cup of Nations. Meanwhile, Shs2.5 billion is scheduled for Uganda Blood Transfusion Service to cover shortfalls suffered in its operational budget activities.
The frequent supplementary budgets have raised concerns about fiscal indiscipline and abuse, as noted in the 2022/2023 Auditor General’s report. The three supplementary budgets cleared by Parliament will lead to an upward adjustment to the Shs52.736 trillion budget approved last year.
The revisions also come with a significant increase in borrowing from external markets, from Shs8.905Trn to Shs10.977Trn, and a larger reliance on domestic commercial banks, with a planned borrowing of Shs28.768Trn. This increased borrowing is expected to help finance the government’s development projects and programs, but may also have implications for the private sector, as commercial banks may prioritize lending to the government over private businesses, potentially increasing the cost of capital.
