The finance ministry has outlined five focus areas for the government’s budget estimates for the 2019/2020 financial year.
While speaking at the National Budget Conference and Economic Growth Forum for FY 2019/2020, Matia Kasaija, the minister of finance said the focus areas include harnessing key growth sectors by increasing production and productivity in the agricultural sector to support agro-industrialization; commercialising mineral endowments; promoting tourism; and enhancing private sector growth and development centred on industrialisation, trade, and export competitiveness.
“The budget for the next financial year builds on the strategy for financial year 2018/2019. We will, however, focus on realigning our strategic interventions to address current challenges to achieve the desired socioeconomic outcomes and harness growth opportunities,” he said.
Other areas include promoting human capital development to provide a skilled and healthy labour force, strengthening public sector management to enhance returns to public and private investment both at firm-level; and developing a financing framework anchored on both an effective domestic revenue strategy and responsive debt management reforms to maximize the impact of available resources.
“The financing mix will be guided by the domestic revenue strategy which targets tax-GDP ratio of 16%, and a medium debt strategy which aims at keeping debt at sustainable level.”
“Domestic borrowing will be executed mainly through [the] issuance of longer-term securities with fixed interest rates to reduce refinancing risks while external financing will continue to be sourced from concessional financing sources,” he said.
The minister said the budget will specifically focus on closing loopholes in tax administration and compliance through improved use of third-party information, gradual transformation to a cashless economy, and broadening the tax base.
Development partners, however, specifically cautioned government on debt and urged it to “scrutinise” its new borrowing initiatives “very carefully”.
If “all projects currently included in the investment pipeline were fully implemented on time, remaining below prudent thresholds would be challenging,” Jennie Barugh, the head of the United Kingdom’s Department for International Development (Uganda), and also the chairperson of Local Development Partners Group said.
“Paying the costs of debt already takes up 12% of Uganda’s budget – higher than allocations to critical sectors such as health. Managing these competing priorities within a budget is a carful balancing act.”