The Minister of State for Finance, Planning, and Economic Development and General Duties, Henry Ariganyira Musasizi, has dismissed the allegations made by the veteran politician, Dr. Kizza Besigye, of how Uganda’s economy is being run on borrowed money.
Besigye, during a press conference at Katonga Road in Kampala on Wednesday, October 9, 2024, alleged that Uganda’s economy is running on borrowed money, including state house expenditures, pension and gratuity, and parliamentary expenditures, among others.
However, Minister Musasizi clarified that Besigye’s allegations are misleading and alarming, stating that Uganda’s budget is made based on sound and internationally recognized principles.
“I want to assure the country that all the debt that has been acquired is for economic infrastructure projects to increase the competitiveness of the economy. The repayment of the debt is programmed to be done over some time in line with our debt repayment capacity,” he said.
Musasizi made the remarks while addressing the press on Tuesday, October 22, 2024, at the Uganda Media Centre in Kampala.
He added that there is no cause for alarm as the economy is on a sound footing and the budget is done to address the government priorities, saying that the Ministry of Finance is emphasizing fiscal consolidation with an enhanced focus on increasing domestic revenue mobilization, controlled borrowing, and allocating efficiency and effectiveness.
“It is not true for someone to come and say that all the money they collect is used to pay debt and borrow to pay government salaries and other commitments. Here are the numbers from an authority responsible. Let Besigye come with his numbers in case he has them, and of course, it’s impossible because he does not have them,” Musasizi said.
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According to Musasizi, from the budget breakdown, the government can comfortably meet obligations on debt payments, including amortization as well as pension, gratuity, and security obligations, and there is a balance of investment in the tenfold economic growth areas and service delivery.
A recent research report by Initiative for Social and Economic Rights (ISER) indicates that the total budget for FY 2024/25 is a staggering UGX 72.1 trillion, marking a significant increase of UGX 14.1 trillion from the initial proposal of UGX 58 trillion.
Is it a budget surplus or deficit?
The ISER report further explained that the government expects to collect UGX 32.3 trillion in domestic resources to finance its UGX 72 trillion budget, which represents an increase of UGX 2.3 trillion (7.7%) from FY 2023/24. This leaves a deficit of UGX 39.7 trillion. In percentage terms, the deficit accounts for 55% of the proposed budget, implying that only 45% of the budget will be financed through domestic resources.
According to the report, the deficit will be financed through UGX 8.9 trillion borrowed domestically, including from the Bank of Uganda; UGX 19.8 trillion borrowed to pay off maturing domestic debt; and UGX 10.9 trillion resources received from external sources in the form of loans and grants.
