The Minister of Finance and Economic Planning Hon Matia Kasaija has lashed out at the media for what he called “feeding the public with inaccurate” reports regarding the amount of money government intends to borrow to meet shortfalls of the salaries of civil servants.
He refuted the reports published by State owned newspaper while appearing at the Media Center on Tuesday.
“Yesterday, Monday 19th February 2018 the New Vision Newspaper front page lead headline stated that Government is borrowing UShs. 700 Billion to pay salaries for public servants.”
I would like to inform the General Public that this story was an exaggeration of the proposed borrowing that I laid before Parliament. We borrow to a large extent to finance capital development and production,” he said.
He added that in his letter dated 9th February 2018; he submitted a proposal to Parliament seeking authority from the House, in accordance with the requirements of Article 159 of the Constitution of the Republic of Uganda, to borrow additional Ushs 736 Billion from the domestic financial market to finance the Budget for FY 2017/18.
The purpose of this borrowing is to mitigate the revenue shortfalls being experienced this year.
In the First Half of the Financial Year, Government revenues recorded a shortfall of UShs. 324 billionon account of the following; Lower collections for VAT (Shs.139.04 billion), International trade Taxes (Shs.53.07 billion), and Income and excise taxes (Shs.144.85 billion).
“As a result of the above Shortfallsand in order bridge the funding deficit,Ushs 736 billion will be borrowed from the Domestic Market. This borrowing will not have a significant impact on the private sector given that liquidity in the market currently amounts to Ushs.2 Trillion, and it comes at a time when interest rates are low.Currently theCentral Bank lending Rate stands at 9%.
It’s important to note that the borrowing will ensure that we meet the financing obligations of on-going infrastructure projects whose certificates will fall due this financial year as well asother statutory obligations such as wages.”
He re-iterated that whereas Ushs 48 billion of the borrowing will meet the shortfall on Salaries, this is only 1.3% of the Total GoU wage bill, the Wage Bill for this Financial Year, amounts to Ushs 3.58 Trillion and a total of Ushs 2.70 Trillion (75.4%) has already been released covering the first three (3) Quarters of the Financial Year.
“It is therefore, erroneous to assume or create the impression that Government has no money to pay salaries.”