On Thursday, 14th.06.2019, Uganda’s Minister of Finance, Planning and Economic Development, Hon. Matia Kasaija staked the ambitious Shs 40.5 trillion budget on harnessing minerals, providing affordable financing and expanding the industrial base to spur economic growth.
Kasaija’s budget speech delivered on behalf of President Yoweri Museveni, listed unemployment, income inequality and malnutrition coupled with unhealthy lifestyles as the major stumbling blocks his three-point strategy seeks to remedy.
Despite economic growth evidenced by expansion of the Gross Domestic Product (GDP) – which is the sum total of goods and services produced in the economy, from $28 billion to now $29.5 billion, unemployment remains discouraging.
“…there are 600,000 entrants into the job market every year,” said Kasaija, a bulge that cannot be supported by the 6.3 per cent economic growth.
“Ensuring that the benefit of economic growth reaches all Ugandans…we will be expanding the industrial base of the economy; the next phase of industrialisation will provide goods for export and also replace many the goods we import,” he said.
Industrial parks are set to get an electrification and development infrastructure boost worth Shs 428.2 billion.
To cure the cost of credit being afforded, Kasaija said that youth who attempt to privately venture into economic activities and suffer the ever-astronomical interest rates in commercial banks will soon get relief.
This, he said, will be through the Shs304 billion allocated to capitalise the Uganda Development Bank, whose low interest rates is intended to break the monopoly of the rogue commercial banks.
Critics, however, say government domestic borrowing to the tune of over Shs10 trillion in every financial year, is responsible for the adamance by commercial banks to lend private citizens.
In the Financial Year 2019/2020, like many other before it, the greatest percentage of the budget goes to pay the debts to the tune of Shs10 trillion.
Only Ministry of Works and Transport comes at distant second at Shs 6.4 trillion.
With such assuredness of a borrower like government, a trader down town would not stand a chance in a competition for credit.
Government has hope in the petroleum industry to generate requisite revenue needed for the attainment of the mega infrastructure goals.
Kasaija said Shs3 trillion, which has been allocated to energy and minerals development, coupled with the Shs 6.4 trillion for works will finance Kabaale International Airport and key oil roads.
Meanwhile, government seeks to fork Shs3.2 trillion from Pay As You Earn (PAYE), to raise the revenue for budget execution. Corporate tax which comes from profits made by companies filing returns, will account for Shs1.2 trillion of the revenue base.
Taxes on petroleum products will be Shs2.2 trillion, while tax on imports will return Shs4.5 trillion in taxes. The controversial Over The Top (OTT) taxes are to bring Shs 51.7 billion in revenue.
In his address on the State of the Nation, Museveni exuded confidence in the speedy growth of the economy, saying government will continue prioritising infrastructure, energy and security as enablers of economic growth.
The total budget the Financial Year 2019/2020 amounts to Shs 40.5 trillion.