Inside StoryPRIME

Inside Story: Each Ugandan to pay Ugx 1.7M to clear public debt of Ugx 80 Trillion

According to the recently passed budget committee report for the financial year 2023/24, Uganda’s total public debt stands at a staggering Shs 80.7 trillion. Of this amount, Shs 47.7 trillion constitutes external debt, while Shs 30 trillion is domestic debt.

The level of state debt in Uganda has reached a worryingly high point. It is estimated that each of Uganda’s 45 million people will need to pay a one-time donation of at least Shs 1.7 million in order to alleviate the burden.

According to the report that was approved by the budget committee for the fiscal year 2023/24, the total amount of Uganda’s public debt currently stands at an astounding Shs 80.7 trillion. Out of this total, 47.7 trillion shillings represent external debt, while the remaining 30 trillion shillings represent internal debt.

In addition to the money that will be brought in from taxes and other sources, Uganda will have to take out loans amounting to 6.16 trillion shillings in order to have enough money to pay the 52 trillion shilling budget for the next fiscal year. Patrick Isiagi, who is the chairperson of the budget committee, pointed out that there are some vulnerabilities, despite the fact that it is believed that the country’s debt can be sustained in the medium and long terms.

Isiagi highlights the growing burden of debt service as well as the potential of export shocks as important concerns in his analysis. He urges the government to exercise caution while contracting additional debt in the future in order to keep the levels at a sustainable level.

A policy expert and the chief executive officer of The Uhuru Institute, Leonard Okello, makes some very salient observations about the manner in which Uganda handles its debt. He says that decisions about borrowing are influenced by political interests and the projectization of government projects, which frequently results in theft of funds.

Okello is concerned that the political elite wastes borrowed monies regularly, which leads to wasteful expenditure and double financing, and he expresses his concern in this regard. The delivery of services is ultimately hampered as a result of this situation’s influence on essential industries such as health and education.

We take out loans to finance practically all of our major projects, but those funds are being frittered away by members of the political class who are looking to increase their political standing. The State House has nearly identical copies of every other government agency. “This is extravagance and double financing that comes at the cost of better service delivery in critical sectors like health and education,” he added. “It comes at the cost of better service delivery in critical sectors like health and education.”

Before taking out a loan, it is crucial, according to Okello, to do an analysis of whether or not the funds are necessary and whether or not they can be absorbed. In addition to this, he draws attention to the ongoing investigation of government employees in order to locate and dismiss “ghost workers,” which would result in a reduction in the costs of administration.

In the past, the government has been criticized for its low absorption rate of loans, which was ascribed to poor project implementation. This criticism was directed toward the government’s poor performance. When loans are not utilized in a timely manner, unnecessary penalties and fees associated with repayment are incurred.

According to the preliminary projections of the national budget for the fiscal year 2023/2024, there will be an important allocation of Shs 17 trillion for the payment of debt service obligations. However, the budget allocation for State House and the Presidency is a combined Shs 500 billion, while the ministry of Health only receives a meager Shs 113 billion.

Dr. Herbert Luswata, who serves as the secretary general of the Uganda Medical Association, has expressed his displeasure with these figures. Luswata is shocked to learn that inadequate resources are still being allocated to the health sector, which highlights Uganda’s inability to satisfy the requirements of the Abuja statement.

The statement was made during a summit in Abuja, Nigeria, in April of 2001, and it commits member countries of the African Union to allocating 15 percent of their national budgets to health care spending.

The weight of Uganda’s national debt and the challenges that arise from its allocation of resources continue to be important concerns. Urgent action is required to resolve the government’s debt issue and ensure that vital sectors receive appropriate financing to provide essential services to the public. This situation has resulted in the country being in a financially precarious position.

Dr. Herbert Luswata voiced his worries in reaction to the ongoing protests for deployment that were staged by medical residents and interns. He divulged the information that on May 17, 2023, a discussion took place with Dr. Diana Atwine, who serves as the permanent secretary for the Ministry of Health.

For the conference, Dr. Atwiine made a commitment to the attendees that the allowances of medical interns and senior house officers, which are estimated to be worth Shs 80 billion, would be taken into consideration for the subsequent fiscal year. The medical community expressed their dissatisfaction with the fact that the budget projections that were given to parliament the day after did not include these allowances.

Dr. Luswata expressed his disapproval of the government, arguing that it cannot make the excuse that it does not have enough money when other people have been given the same amount.

Access to medical services has been considerably hampered in numerous hospitals as a result of the absence of interns and senior house officers from their shifts. In addition, specialists in medicine are currently on strike because of a pay disparity that amounts to 21 billion Ugandan Shillings. If there are no specialists accessible, it is extremely difficult to provide adequate medical care to patients.

In order to rectify the situation, Luswata underlined the importance of the government providing written assurances that they will address the issues raised by both the professionals and the interns.

“At the moment, the specialized doctors are also on strike over a pay discrepancy that amounts to 21 billion Shillings. When hospitals lack specialists, there is really little that can be done to help patients. We were all in agreement that a written commitment from the government was necessary before the specialists could get back to work. He stated that we are still waiting for it as well as another communication regarding the impending deployment of medical doctors.

Luswata brought attention to the scarcity of experts in Uganda by claiming that there are now only 350 specialists available, despite the fact that the country has set a goal of having more than 2,000 specialist doctors by the year 2020. In response to the concerns expressed by the medical community, he demanded that the government allot Shs 100 billion to address those concerns.

In spite of the fact that the expansion of infrastructure is significant, he emphasized that it is of equal significance to provide regional hospitals with professionals as well as supplies in order to guarantee that they will function effectively. He underlined that the health sector ought to be a major priority, rather than an afterthought, in the overall plan.
“The government should put aside one hundred billion shillings in order to solve our issues. Even though it is beneficial for the majority of our regional hospitals to have nice infrastructure, the existence of such nice structures will only make sense if we are able to assign specialists and supplies to the hospitals in question. He continued by saying that the health industry is an important part of Uganda and that it should not be an afterthought.

A lack of discipline

Agaba Marlon, the spokesman for the Anti-Corruption Coalition Uganda, expressed concerns regarding a lack of adherence to budgetary guidelines. He was speaking with Ugandan technocrats who were participating in the budgeting process.

He was critical of the routine creation of additional budgets, which frequently came from the State House or the Department of Security and were responsible for redistributing funds that had been already allotted. This lack of discipline with the budget interferes with the correct distribution of resources and prevents the budget from serving the purpose for which it was created.

Marlon went on to say that corruption at the level of budgeting is a major problem, and that there are a variety of interests and individuals involved in the process of diverting monies. He repeated the thoughts of the Speaker of Parliament, who had recently raised concerns about the budgeting process being hijacked. He mirrored the feelings of the Speaker of Parliament.

“We have a lot of supplementary budgets coming up two or three months after the budget has been passed, and the majority of them come from the State House and security. When such budgets are presented, it does not mean that there is new money; rather, it means that money that was already programmed will be redirected and provided to other entities, as he explained.

Because their money is distributed to other organizations in the form of supplementary budgets, the majority of districts receive 70 percent of their budgets; therefore, there is a lack of budget discipline.

“Corruption is another issue that prevents our budget from accomplishing its function in the way that it was intended. The planning of the budget is the first step in corrupt practices. Recent events have led to the speaker crying out that the process of budgeting is being hacked because there are so many persons and interests involved in the process. “They give money to an entity knowing that, that is where they are going to swindle it from,” he said. “They are a bunch of con artists.”

Marlon stressed the importance of priority as a means of ensuring that Ugandans are able to profit from the money they contribute in the form of taxes. It was said that the minority report helped bring the budget of the State House and a few other agencies into line, exposing unneeded expenses such as purchasing clothes for the president. He said that the budget was brought into line by the minority report.

Marlon claimed that these money would be better served by being distributed to areas that contribute more to the growth of the economy, such as the ministry of Works, education, and health care.

The issues raised by medical professionals and civil society leaders highlight the urgent need for good budget management and the allocation of resources to address crucial areas like the development of infrastructure.

During an interview that took place on May 22, Lawyer Luyim-bazi Nalukoola stated that Ugandans are saddled with the responsibility that comes with having a president who has remained in office for too long. There isn’t a rise then a rise; rather, there is a rise then a collapse. When it comes to the budgeting process, Uganda will incur administrative charges.

“State House is one of the institutions that is being used to facilitate the spending of money. The White House releases a classified expenditure report and a supplementary budget approximately once every other time. It is expected that the State House would continue to waste money that otherwise could have been allocated to other organizations and fields, such as the Ministry of Health, the Education Ministry, and other fields. Because of State House, the same sectors are going to have to suffer,” he remarked.

He continued by saying, “It is inconceivable that we are living in a nation in which the government takes out loans to pay its employees,”

Principal Requirement

Julius Mukunda, the executive director of the Civil Society Budget Advocacy Group (CSBAG), made the following statement in a previous interview with The Observer: “To run away from the budgeting process, most government agencies no longer budget for their core mandates in anticipation of supplementary budgets as classified expenditures.”

“Ninety percent of the money that we spend as supplementary expenditures does not qualify as supplementary budgets,” the report stated. In spite of the fact that it should be required by law, practically everyone now need a supplemental budget. Only in the event of an emergency should additional budgets be approved, given that they throw off the entire planning process. A budget does not contain any expenses that necessitate the creation of an additional budget. “These are expenses that have been budgeted for and can always be taken into consideration in the budget for the fiscal year,” Mukunda added.

The Alliance for Finance Monitoring is a non-governmental organization that monitors the flow of money in politics. In their report published in June 2022, which put a bright spotlight on supplementary budgets, they reported that the government of Uganda had appropriated four supplementary budgets totaling Shs 9.138 trillion ($2.538 billion) between November 2021 and May 2022. This information was included in their report on supplementary budgets.

“The widely recognized secret behind the high appetites for supplementary budgets is that the conditions regulating the appropriation of the supplementary budgets are less strict than those governing the appropriation of the regular budget. The supplementary budgets are where the majority of the dubious items can be found. When supplementary budgets are used to finance fixed costs rather than capital investment, such as paying salaries, renting office space, etc., they have no impact on the growth of GDP,” a section of their research read.


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