As the government aims to deliver on the campaign promises made by the ruling party in the recently concluded elections, the first glimpse of their plans is expected in the Budget Speech to be delivered today at 2pm.
The budget will be delivered this afternoon by – most probably – Mr. Matia Kasaija, the finance minister, with a continued focus on infrastructure.
According to the approved expenditure made prior to the speech, there are no surprises expected. The ministry is expected to allocate a total of Shs6.27trillion to the works and energy sectors.
The Education sector completes the top three budgetary allocations with Shs2.7trillion up from Shs2trillion in 2015/16. Going by the past record of the government, this has been the most consistent trend of allocations.
The most significant change in the budget for the 2016/17 financial year is in the agricultural sector. The minister is expected to announce that expenditure on agriculture will rise from Shs510bn in 2015/16 to Shs824.20bn in 2016/17.
The increase in the allocation for agriculture is in fulfillment of the campaign promise of President Museveni delivering more funds towards initiatives like Operation Wealth Creation (OWC) and Naads. Additionally, the government increased the wages of extension workers from Shs16.2bn in 2015/16 to Shs23bn in 2016/17.
Even with the increased agriculture expenditure, the 3 percent allocation still falls short of the 10 percent agreed by African leaders in the 2003 Maputo declaration. The same sector, however, suffers weak absorption capacity even with its low allocation, according to the Ministry of Finance.
On further delivery of campaign promises, there is more funding being availed to the Women Enterprise Fund to about Shs50bn and another Shs50bn for the Youth Livelihood Fund. Both are aimed at boosting entrepreneurship of women and the youth respectively, which the government expects will in turn boost economic growth and reduce the unemployment rates in the country.
This budget will be funded with a mix of domestic revenue, domestic debt, and external financing. The bulk of the budget will be funded by tax revenues, with Uganda Revenue Authority (URA) expected to be given a target of almost Shs13trillion.
The expectation is that this higher target will be achieved through new tax measures on especially sugar and fuel. The government will borrow from the domestic market about Shs1trillion although the ministry of finance says that number could be revised downwards to Shs600bn.
External financing will generate at least Shs6.7trillion, with the bulk of it being concessional loans.
The budgeting process currently operates under Public Finance Management Act 2015 where the budget speech comes once expenditure and tax collection measures have been approved.
On July 1st, 2016, the new budget will come into force and URA will start collecting the new taxes. The old budgeting system required approvals of estimates and tax measures to be done after the speech. That process often delayed implementation of projects and collection of taxes.
The Daily Monitor
UM– USEKE.RW
