Government cautioned on debt burden as Parliament adopts a Ugx 29 trillion Budget

Published 3 years ago -

The Parliamentary Budget Committee has cautioned government against high levels of the Public debt, saying that the “current public debt situation for the country is unsustainable.”

In a 91 Page Report on the Ministerial Policy Statements, the Committee warned that debt “makes the country highly vulnerable”. The committee also went ahead to note that, the country is in debt to the extent that the Budget can no longer adequately provide for quality education and health services.

“The Committee recommends that Government takes measures to restructure the budget, as well as lowering budget ceilings where possible,” said Mr Amos Lugoloobi (NRM –Ntenjeru North), the Committee Chair.

According to the report, out of the Ugx 28.99 tn Budget for FY 2017/18, only Ugx 12.9 tn (44.8%) will be available for discretionary spending, while the balance, Ugx 16 tn is earmarked for debt servicing and project support.

The committee also noted that no new loan request should be approved by Parliament for any Ministry, Department or Agency whose total absorption of loans is less than 50%, so as to “curb poor preparations and funding of non-priority development projects.”

Members were also concerned by high levels of interest payments, singling out domestic interest payments.

“The higher domestic borrowing by Government has [got] crowding-out effects to private sector growth through higher interest rates, which constrain private sector borrowing, lowers aggregate demand and hence slower growth,” the report noted.

The House however adopted a sum of 29 trillion shillings for the 2017/18 National Budget.

The decision followed rigorous debate and recommendations by the Parliamentary Committee on the Budget to adopt the Budget allocations in line with the Public Order Management Act of 2015.

In the adopted figures, Ugx 7.6 trillion is for recurrent expenditure while 11.5 is for Development Expenditure.

Meanwhile, Ugx 10 trillion has been captured for total statutory expenditure but debate of specific sectors is still underway and details will come in our next bulletin.



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