Dur­ing the sit­ting of 11th Feb­ru­ary 2020, Chaired by the Speaker of Par­lia­ment, Rt. Hon. Kadaga Re­becca, Par­lia­ment passed a mo­tion by Hon. Syda Bbumba for the adop­tion of the re­port of the Com­mit­tee on Na­tional Econ­omy on the pro­posal to bor­row up to euro 300 mil­lion from Stan­bic Bank (U) Ltd and euro 300 mil­lion from Trade De­vel­op­ment Bank to fi­nance the bud­get deficit for FY 2019/​20.

The Com­mit­tee Chair­per­son Hon. Bbumba in­formed the House that the fund­ing gap in the 2019/​20 bud­get was a re­sult of the fail­ure to meet the tar­get rev­enue col­lec­tions by the Uganda Rev­enue Au­thor­ity. For the pe­riod of July to Oc­to­ber 2019, the over­all rev­enue col­lec­tions amounted to UGX 5,467.78 bil­lion against a tar­get of UGX 6,071.47 bil­lion cre­at­ing a deficit of UGX 603.69 bil­lion. By end of No­vem­ber 2019, the col­lec­tions had in­creased to UGX 6,910.8 bil­lion against a tar­get of UGX 7,592.3 bil­lion reg­is­ter­ing a deficit of UGX 681.76 bil­lion.

Dur­ing the de­bate,  Hon. Muham­mad Nsereko said that the chal­lenge to rev­enue col­lec­tion is not that peo­ple do not want to pay taxes but rather they are con­cerned about how the col­lected rev­enue is uti­lized. “The is­sue is not that Ugan­dans do not want to pay taxes. Show them where you are go­ing to in­vest the money col­lected, they will pay.” Hon. Nsereko said.

Mem­bers ex­pressed con­cern that the coun­try’s rate of bor­row­ing vis-a-vis the rate of na­tional rev­enue could worsen Ugan­da’s debt bur­den. Hon. An­warach Joshua called it un­pro­duc­tive bor­row­ing since a sig­nif­i­cant por­tion is of the loan is meant for ex­pen­di­ture pres­sures in se­cu­rity/ clas­si­fied ex­pen­di­ture and wage short­falls. He in­di­cated that he would have sup­ported the loan if it was meant for in­fra­struc­tural de­vel­op­ment.

An­other con­cern was that the loan will be got from com­mer­cial banks that have higher in­ter­est rates. ‘Should the Gov­ern­ment con­tinue bor­row­ing from Com­mer­cial banks? If yes, we are sell­ing the na­tion.’ Hon. Nan­dala Mafabi as­serted.

Mem­bers ob­served that be­cause of the pre­vail­ing cir­cum­stances, es­pe­cially the need to meet the deficit in the 2019/​20 bud­get which was al­ready passed, the loan had to be ap­proved.

Par­lia­ment ap­proved the loan and put into con­sid­er­a­tion the rec­om­men­da­tions by the Com­mit­tee that; Gov­ern­ment should pro­vide a for­mal state­ment on the op­er­a­tions of Uganda Rev­enue Au­thor­ity to Par­lia­ment within one month. In ad­di­tion, the Do­mes­tic Rev­enue Mo­bi­liza­tion Strat­egy that en­vis­ages in­creas­ing do­mes­tic rev­enues be at least by 0.5% of GDP every fi­nan­cial year should be im­ple­mented to re­duce on the need for bor­row­ing to sup­port the bud­get and rather limit loans to spe­cific pro­jects.