Finance Minister Matia Kasaija has stressed that the government should not consistently rely on borrowing to meet ongoing financial demands, many of which can be postponed, delayed, or eliminated. Speaking at a pre-budget dialogue organized by the Civil Society Budget Advocacy Group for the 2024/25 financial year, Kasaija firmly conveyed his commitment to avoiding perpetual borrowing, emphasizing the necessity of preserving the nation’s financial stability. Despite the routine emergence of new requests during Cabinet meetings, Kasaija highlighted the importance of careful prioritization, acknowledging that not all demands are urgent or indispensable.
In response to concerns voiced by civil society organizations regarding the escalating public debt and its challenges to the economy amidst sluggish tax revenues, Kasaija pointed out the enduring nature of supplementary budget requests over the past decade. This continues despite previous government pledges to eliminate such practices due to their contribution to increased borrowing and subsequent spikes in public debt.
As of June 2023, the Auditor General, John Muwanga, reported a significant upswing in public debt, reaching Shs96 trillion. Domestic debt comprised Shs43.6 trillion (45.4 percent), while external debt amounted to Shs52.4 trillion (54.6 percent). The mounting public debt continues to strain domestic revenue, projected to decrease from Shs25.2 trillion in the 2023/24 financial year to Shs21.7 trillion in the 2024/25 financial year.
The allocation of substantial funds to debt servicing, a key budgetary component, is anticipated to rise to Shs3.2 trillion in the 2024/25 financial year from Shs2.6 trillion, diverting resources away from priority sectors of the economy.
Kasaija also addressed criticism from certain government officials who criticize him as a “miser” for rejecting specific supplementary requests. He emphasized the inevitability of financial constraints, highlighting the importance of prioritizing sectors with a significant economic impact, recognizing that financial resources, regardless of the amount, will never be sufficient for every sector.
For the 2024/25 financial year, the government has identified key priority sectors, including investments in human capital, infrastructure (roads), peace and security, electricity generation and transmission, and effective disaster management. Kasaija attributed fiscal indiscipline to ministries and government entities that fail to efficiently utilize allocated funds, stressing the necessity for prudent financial management.
Julius Mukunda, the Executive Director of the Civil Society Budget Advocacy Group, expressed concern about the economic consequences of escalating debt, urging the government to address issues such as imprudent borrowing and spending. He highlighted the potential for savings in areas such as domestic and international travel, entertainment, and welfare.
