Members of parliament have rejected a Shs200 billion earmarked by the Ministry of Finance, describing it as ‘insufficient.’
The amount in question was intended to cater to the house’s domestic arrears, which the legislators argue is less compared to the already pending Shs14.06 trillion the government owes suppliers.
Presenting the committee’s report on the 2025/26 National Budget Framework Paper on January 30, 2025, Vice Chairperson Achia Remigio mentioned that the proposed Shs200 billion allocation was abnormally inadequate for the verified domestic arrears.
According to the Auditor General’s 2024 report, domestic arrears stood at Shs14.06 trillion, with Shs8.312 trillion owed as reimbursements to the Bank of Uganda and Shs5.748 trillion due for unpaid invoices, pensions, and gratuities.
“The committee recommends that the government provide Shs1.15 trillion during FY 2025/26 and in the subsequent financial years until 2029/30. This will clear the outstanding bill of domestic arrears amounting to Shs5.748 trillion,” Remigio stated.
He emphasized the need to prioritize unpaid certificates to prevent further accumulation of arrears.
Remigio also pointed out structural weaknesses in the financial system that allow commitments to be made without adequate funds, undermining budget credibility.
He warned that the growing public debt, which stood at $25.6 billion (Shs94.9 trillion) as of June 30, 2024, necessitates a gradual reduction in domestic borrowing.
“The government should scale down domestic borrowing, as it is becoming unsustainable and negatively affects private sector credit,” Remigio said.
The members of parliament on the committee recommended an annual allocation of Shs1.15 trillion over the next five years to clear the outstanding arrears.
However, it cautioned against over-reliance on local commercial banks to finance the national budget, warning that excessive domestic borrowing could hurt private sector lending.
The committee recommended prioritizing export promotion and adequately funding agencies like the Uganda Export Promotion Board (UEPB) to enhance exports, improve the balance of payments, and foster economic growth and employment.
