Humbled, Gov’t Admits Failure to Grow Revenue, shrinks 2021-22 Budget by 21%

In a brave move that may appear like eating humble pie, the Government has decided to tame its appetite for spending and drastically cut the next budget by sh11 trillion.

The Ministry of Finance has unveiled a 40.7 trillion shillings budget for the financial year 2021/2022, which is a whole 21.5% smaller than the current sh.51 trillion budget for FY 2020-21. Even before Covid-19 supplementaries blew it to that level and grew the national debt by nearly $2billion, the initial budget was sh45trillion, still mush bigger than the next one of sh40.0trillion.

Unveiling the 2021-22 budget at the launch of the Presidential Advisory Committee on the Budget (PACOB) for FY 2021/2022 on Tuesday, State Minister for Finance David Bahati said that 21 trillion Shillings come from domestic revenues. PACOB mostly comprises selected Members of Parliament, experts from the National Planning Authority (NPA), officials from Ministry of Finance and others from Office of the Prime Minister.

In almost unprecedented humility, Minister Bahati said that despite numerous reforms, domestic revenue mobilization is still below the economy’s potential, though the country’s public expenditure is growing at a faster rate, and the public debt stock is also increasing.

Bahati swore that government is going to put more emphasis on growing revenue.

A furious President Yoweri Museveni earlier this year ordered the sacking of several key officials in the Uganda Revenue Authority. Although there have been no corruption charges brought against them, the president is believed to have been convinced by the circumstantial evidence that something fishy is going at URA following years of failing to increase the tax revenue collection  while the economy is growing every year. Failure by URA to grow revenue significantly can therefore at best be due to incompetence and at worst, corruption.

Bahati on Tuesday called on PACOB members to devise ways of growing domestic revenue. He expressed optimism that the digital stamps reform the government has started implementing will in the long-run bring in more revenue.

The budget interventions for FY 2021-22 are clustered in alignment with the National Development Plan III (NDP) priorities of value addition in key growth opportunities, strengthening the private sector to create jobs, consolidating and increasing the stock and quality of productive infrastructure, enhancing productivity and social wellbeing of the population and strengthening the role of the state in guiding and facilitating development.

Prof. Pamela Mbabazi, the Chairperson National Planning Authority (NPA) pointed out to PACOB that Agro-industrialization, Integrated Transport Development and Infrastructure Services and Human Capital development form the NDP III program priorities for FY 2021-22.

PACOB has been given only up to the end of November 2020 to report back to the President, who is the head of the Executive that guides the Minister of Finance, on the budget proposals and source of funding.

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