The Government has said it is committed to ending the fiscal indiscipline of supplementary budgets, beginning next FY 2022/2023.
Presenting a statement on the Sh47trillion national budget estimate currently before Parliament for scrutiny, the State Minister for Finance (General Duties), Henry Musasizi said that they are determined to limit supplementary expenditures to 3% of the total approved budgets as provided for in the law.
He, therefore, appealed to the House to consider the budget estimates for the 2022/2023 financial year with this assurance in mind.
Whereas the Constitution of the Republic of Uganda and Public Finance Management Act, 2015 allows for supplementary expenditures at a given threshold, there have been concerns from stakeholders including Parliament that this type of budgeting by Government is undermining the credibility of annual planning and budgeting.
Article 156 of the Constitution of the Republic of Uganda is the primary basis for supplementary appropriation. Clause (2), provides that If in respect of any financial year it is found that the amount appropriated for any purpose under the Appropriation Act is insufficient or that a need has arisen for expenditure for a purpose for which no amount has been appropriated by that Act; or that any monies have been expended for any purpose in excess of the amount appropriated for that purpose or for a purpose for which no amount has been appropriated by that Act, a supplementary estimate showing the sums required or spent shall be laid down before Parliament and in the case of excess expenditure, within four months after the money is spent.”
Between Financial Year 2015/16 to 2019/20, there had been a drastic increase in the number of supplementary budgets considered. The total supplementary expenditure approved by Parliament increased from Shs889 billion (3.7% of the approved budget) in FY 2015/16 to Shs3.249 trillion (8.0% of the approved budget) in FY 2019/20.
During the FY 2019/20 the entire supplementary expenditure was largely funded by borrowing which included: USD 300 million (Shs1.125 trillion) from the World Bank and USD 491.5 million (Shs1.843 billion) from International Monetary Fund, EUR 600 million (Shs2.497 billion) budget support loan from Stanbic Bank (U) Ltd and Trade Development Bank.
The Minister said that supplementary budgets derail the budget and there was the need to abide by the legal provision which puts it at three percent of the total approved budget.
The Minister also made a commitment that borrowing in the financial year 2022/23 would not exceed 53.9 percent of Gross Domestic Product (GDP) as provided in the Charter of Fiscal Responsibility.