KAMPALA, Uganda: Economists, trade experts and analysts have punched holes into Finance Minister Matia Kasaija’s 2017/18 budget announced on Thursday June 8th describing it as a ‘hurdle’.
Kasaija announced the UGX29 trillion budget that will see the revenue collectors, Uganda Revenue Authority (URA) gather UGX15 trillion up from last year’s 12.9 trillion.
Speaking at the dfcu organized budget breakfast at the Kampala Serena Hotel on Tuesday, speaker after speaker said the target set for URA would end up hurting the local Ugandans, especially consumers and traders.
Dr. Fred Muhumuza, a renowned development economist said he saw no economics in the 2017/18 budget. He said; “A budget that cannot address the two major aspects of high population growth rate (3.1%) and a low economy growth rate coupled with a huge debt burden cannot be practical.”
He said with the nation currently having to finance the UGX3.4 trillion in debt, coupled with high government expenditures, leaves a lot to be desired. “If you (country) are growing at a rate that can’t cover the population growth and depreciation that is going down then realize that you are going under,” said Muhumuza.
He said Uganda has very good policies that are not implemented. He called upon government to address the issues that lead to high interest rates. ‘Museveni says he doesn’t mind about the interest rates that the traders have to pay, but it is the traders who pay the taxes, so if they go down, we shall all go under,” he warned.
The Executive director Private Sector Foundation Uganda (PSFU), Gideon Badaggawa said the insufficient funding to agriculture, leaves a lot to be desired. Badaggawa said that government was going to crowd up the private sector especially in terms of borrowing.
“Under the CADIP, all nations that signed are supposed to have a 10% funding to the agriculture sector, even under the NRM manifesto, agriculture is accorded 7%, but when you give the sector just 3% and talk of achieving a middle income status in three years, then something is wrong,” said Badaggawa. He described the 2017/18 budget as one well punctuated by agriculture, irrigation and Operation Wealth Creation.
“What is fueling inflation is the food insecurity. Uganda is not producing. Then the other challenge is that 60% of the implementers lack strategic planning,” he said. He challenged government to come out clear and explain why they discriminate while giving tax incentives to investors. “Why give BIDCO a tax incentives and deny Mukwano? Why should Aya be given a tax holiday while other investors in hotel industry are denied?
Dfcu Chief Financial Officer Kate Kiiza told the audience that with the acquisition of former Crane Bank, the bank was well prepared to provide funding needed for implementing the 2017/18 budget proposals. Earlier the banks managing director Juma Kasame noted that the bank has enough and solid finance capital needed to fuel sectors such as Standard Guage Railway, the oil refinery and roads.
Edgar Isingoma, a renowned accountant and partner with KPMG, however said eyes and ears should not only be focused on the negative aspects of the 2017/18 budget. ‘Look at the positive side as well. If you choose to look at the negative side, you will only see problems,” he said. He said that Uganda can be considered as a growing economy given the fact that URA had a target of collecting Ugx12.9 trillion in 2016/17 and now has a target of collecting Ugx 15 trillion.
The question is one; “How do we widen the tax base? URA has to work so hard to meet the target and they have to do this by reducing on the leakages.” Isingoma, a chartered accountant with over 25 years experience however noted that the reduction on growth as witnessed in the agriculture from 2.8% in 2016/17 to 1.3% in 2017/18 and industry from 4.7% to 3.4% and service industry from 5.9% to 5.1% as well as the private sector from 8% to 4.5% is worrying and needs addressing.