The Minister of Finance & Economic Planning Minister, Matia Kasaija has this afternoon delivered Uganda’s budget at the fifth and final session of the 10th Parliament. The budget reading was pegged under the theme: ‘Stimulating the economy to safeguard livelihoods, jobs, business and industrial recovery’.
Just like the state of nation address delivered last week by the President, the budget speech was delivered virtually as President Museveni was not present in Parliament where MPs and other invited guests were assembled. The President delivered his speech virtually – from State House.
Coronavirus slows Economic growth
In his budget reading today, Finance Minister said the effects of the pandemic coronavirus had slowed Uganda’s economic growth.
Kasaija said that Uganda’s GDP is expected to grow to sh138 trillion in the forthcoming financial year. He reported that the economy grew by 3.1% in the 2019/20 financial year, which was slower than the 5.4% in the previous years. The minister hit a tone of optimism when he reported that agriculture grew by 4.2% in the financial year ending June 30 while the services sector grew by 3.6%.
Uganda’s economic outlook ‘positive’
Giving hope to many, the finance minister said there was alot of optimism, underlining that Uganda’s economic outlook is positive, downplaying fears that the coronavirus pandemic had not affected much of the country’s economy.
“The coronavirus pandemic has helped us to once again demonstrate the economic capacity and the vast opportunities that our country has. The budget for the financial year 2020/21 will support the economy to fully recover, harness the potential that we have, and get back to our progressive journey of double digit GDP growth rate,” he says.
“I call upon Ugandans to ensure they keep safe by particularly following the directives from His Excellency the President and Ministry of Health regarding CoVID-19. The challenge of CoVID-19 will go, and the economy will pick up once again even at a much higher speed’ Kasaija added
Following the finance minister’s presentation, Speaker Rebecca Kadaga invited the President to make his remarks virtually. Starting off, Museveni paid tribute to the three fallen dignitaries: Burundian president Pierre Nkurunziza, Uganda’s ambassador to UN Onyanga Aparr and Maj. Gen. Kasirye Ggwanga.
The 45.5 trillion budget
On April 24, the House, chaired by Speaker Rebecca Kadaga, passed the Appropriation Bill 2020, approving a sh45.5 trillion national budget for the next financial year 2020/2021. In accordance with Article 156 of the Constitution, Parliament is mandated to approve the national budget by May 31, before the start of a new financial year.
The 2020/21’s budget represents a 12.36% increase (about sh6 trillion) compared to the current financial year’s sh40.5 trillion.
The largest proportion of the 2020/2021 budget will be financed domestically by up to 72.5%, going by the Appropriation Bill. Part of the domestic financing will include revenue collection amounting to sh21.7 trillion and sh3.55 trillion in domestic borrowing. External support will be 27.5%.
According to the Appropriation Bill, sh11.9 trillion is for recurrent expenditure, sh18.076 trillion for development expenditure and sh15.494 trillion for statutory expenditure.
According to a report by the Parliament’s committee on the budget, the total revenue as a ratio to Gross Domestic Product (GDP) is projected to increase marginally from 13.4% in FY 2019/2020 to 13.9% in FY 2020/21. The committee recommended that the Government strengthens the mobilisation and collection of revenues, which have stagnated below 16% of GDP for the past years.
Museveni says URA and other corrupt agencies will be dealt with
Museveni in his speech said he was not happy with tax collections. The President pointed out that he is not happy with Uganda’s tax to GDP ratio of 14.3%. He argued that this is among the lowest on the continent, saying that some countries realise a ratio of as much as 18%.
“There has been a lot of corruption in the URA (Uganda Revenue Authority) that one I have cleaned. Like we shall do in other areas,” he vows. He added that Uganda’s low tax returns means more borrowing
Tax relief for businesses
To address the short term emergency liquidity requirements of businesses, boost their cash-flows, and ensure business continuity, the minister proposed the following tax relief measures;
• Defer payment of Corporate Income Tax or Presumptive tax for Corporations and Small, Medium Enterprises (SMEs)
• Defer payment of PAYE by sectors affected
• Waive interest on tax arrears
• Provide for Tax Deductibility of Donations for the Corona Virus Response.
• Expedite Payment of outstanding VAT refunds
Kasaija says which he will present the prepositions to Parliament in due course.