Economists have come out to criticize the 2019/20 budget which was presented this week by Minister of Finance, Matia Kasaija, with most saying it will not cause any visible impact on the local population.
Dr Fred Muhumuza, a senior economic researcher at Economic Policy Research Center based at Makerere University who is also a former senior economist at Ministry of Finance said government’s continued focus on infrastructure development while ignoring the most important sector which is agriculture will only increase the gap between the rich and the poor.
“Infrastructure is good, building up roads and dams is important but only if these are built alongside other sectors like trade and agriculture. Otherwise whom are you building these roads for?” he asked
This was during a post budget breakfast hosted by Ernst and Young at Serena Hotel on Friday to shed more light on the budget.
Minister Kasaija on Thursday unveiled the Shs 40.4trillion budget for the financial year 2019/2020. Out of this, Shs 6.4trillion (19.1%) was allocated to Works and Transport, while 3.6 trillion went to security, Shs. 3.4 trillion to Education and sports, Shs 3 trillion to Energy among others.
Agriculture which employs 80% of the local population was given 1.1trillion accounting for only 3.2% of the annual budget.
Gideon Badagawa, the head of Private Sector Foundation Uganda (PSFU), noted that although this budget’s theme was “Industrialization for job creation and shared prosperity”, the budget allocations did not reflect government’s commitment to achieve this target.
Badagawa said the fact that Uganda is looking to finance almost half of the budget (49%) through borrowing especially domestic borrowing is worrying for the private sector.
“If government is borrowing from the domestic lenders at even a higher interest rate, which lender will be willing to lend to the small and medium traders or farmers? This will worsen the credit access problems for SMEs” he said.
Minister Kasaija noted that 51.6% of the entire budget will be collected locally by Uganda Revenue Authority while 12.2 trillion (30.3%) will be raised through internal and external borrowing. The remaining Shs7.3 trillion will be obtained from Budget support in form of aid from development partners
David Baliraine, EY Associate Director noted that although Ugandan economy has recovered and is growing at 6%, with an average income/ income per capita of about (US$825) Ugx3.1m per person per year in 2017/2018, a slight increase from US$800 for the previous year, this growth is not inclusive and not visible in the majority of Ugandans.