The stage is set for a public service showdown next week as all government accounting officers will convene to debate and agree on a way forward following far-reaching budgetary cuts proposed by the Covid-19 Task force on Food Security under the coordination of Operation wealth Creation (OWC) housed under the President’s office.
The budgetary proposals that are intended to save an estimated UGX 5.1 Trillion in what is deemed as “wasteful” government expenditures was arrived at by OWC officials after analyzing the Draft Estimates for FY 2020/21 by the Ministry of Finance, Planning and Economic Development and the Parliamentary Budget Committee report for the FY 2020/21 budget.
It is indicated that while the Parliamentary Budget Committee identified UGX 402.5 billion to be saved and reallocated to critical sectors to mitigate the dire effects of the COVID -19 pandemic , OWC officials have since identified well over UGX 5.167 trillion as “wasteful” expenditure that should be saved for reallocation.
This comes shortly after Minister of Finance Mr. Matia Kasaija presented a 45 Trillion budget on behalf of President Yoweri Museveni who is the constitutional holder of the national budget docket. As it has been in recent budget speeches , the Ministry of Works and Transport was allocated the lion’s share of UGX 5.8 trillion (16.2%), followed by security at UGX 4.5 trillion (12.5%), then interest rate payment at UGX 4.01 trillion (11.3%), Education at UGX 3.5 trillion (9.9%) and health at UGX 2.8 trillion (7.8%).
To justify the severe budgetary cuts that will even render some on-going critical government development projects almost redundant ,OWC in their dossier argue that the COVID-19 Pandemic has and will inevitably affect domestic resource mobilization to a level that has not been seen before even when government has hitherto ,struggled to meet its revenue mobilization/collection set targets -before the Covid-19 pandemic era.
They make the case that for instance, the government of Uganda is projecting to collect UGX 21,715 billion in the FY 2020/2021 but this will not be realized due to the COVID19 negative effects on the economy particularly emerging from the 75 day nationwide lockdown and curfew which had never been witnessed by the dotcom generation – many of whom where born after the NRM captured power in 1986.
OWC points to the fact that before the pandemic was reported in Uganda in March this year , URA was posting shortfalls in revenue collections during the half-year period July to December 2019 where URA was projected to collect UGX 9,739.39 billion but managed to cash in only UGX 9,042.01 billion leaving a shortfall of UGX 697.38 billion-accounting for a (7.2% loss in revenues). This perhaps is one of the reasons why an annoyed President Museveni in his state of the nation and budget speech told the nation that he was fed up with the “parasites” read (corrupt )officials in government and that he had to weed-out the “crowd” of the lot at URA.
With that scenario in mind, OWC argues that the decline in domestic revenue mobilization will even increase borrowing and compound the problem of a rising public debt burden. Uganda’s debt stock grew from UGX 46.36 Trillion at end June 2019 to UGX 48.91 Trillion end December 2019. Of this, external debt was UGX 31.53 Trillion (64%), while domestic debt was UGX 17.38Trillion (36%). This represents an increase in nominal debt to GDP from 36.1% in June 2019 to 36.97% in December 2019.
“Therefore, overreliance on domestic borrowing crowds out private sector investments by hiking the cost of borrowing since government consumes a huge chunk of loanable funds from commercial banks leaving less loanable funds for the private sector,” OWC states.
What causes leakages in government’s resource mobilization and why Museveni is pissed
Among the factors that hit hard at Uganda’s domestic resource mobilization challenges, according to OWC , include harmful tax incentives and exemptions. URA is said to be prepared to forego about UGX 500 billion tax revenue in FY2019/2020 via “ illicit financial Flows (IFF)” from corporations through money laundering, corruption and financial misreporting. Don’t forget that this publication reported exclusively ,just recently, that President Museveni fired the “corrupt” leadership at URA due to alleged collusion to turn a blind eye to the wealth by encouraging or aiding tax evasion while the poor downtrodden have their small businesses closed for none payment of taxes . Several multi-national foreign companies are said to be under-declaring their tax obligations and or out right evading of their due taxes by giving fatty “blown-envelops” to the corrupt tax collectors .
OWC says that USD 509 million (approximately UGX 2 trillion) is lost through IFFs, under assessment of mineral royalties, among other illicit transactions. The Ministry of Energy and Mineral Development (MoEMD) collected UGX. 10,503,398,902 in respect of mining royalties, however, a review of reports from the Customs and Excise Department of Uganda Revenue Authority (URA) indicated that government should have collected UGX. 70,193,258,898, in royalties, using the applicable rate of 5% from gold, tantalum and tungsten.
Other leakages are due to lack of collaboration between government entities and URA. OWC quotes the Auditor General’s Report of December 2019 which states that a total of UGX.54 billion was never collected due to lack of coordination between URA and the Gaming board. Additionally, UGX393.8 billion was never collected due to failure by URA to access the Integrated Financial Information Management System- can you imagine!
Why the Ministry of ICT should act rather urgently
Also, a number of expatriates do not pay PAYE due to failure by the Directorate of Immigration to share work permits issued with URA; a number of driving permits are issued without paying the requisite taxes; and a number of instruments are registered by the Ministry of Lands without paying the requisite stamp duty-this clearly shows that even with the dotcom and e-governance era Uganda government ministries and departments don’t speak to each -a problem which the new amiable Minister of ICT Ms. Judith Nabakooba should address rather urgently. And with her journalism and police background -she should not fear nobody in the mafia world .
Expenditures deemed as wasteful, considering the current circumstances OWC digs further , including welfare and entertainment, special meals and drinks, as well as ministerial donations amounting to an embarrassing UGX83.5 billion from the selected sectors.;expenditures that are deemed duplicated in all sectors such ICT, Information Technology and ICT Equipment amounting to UGX 225.3 billion; “Agricultural Supplies’ which is catered for under various Votes. For instance , even the Ministry of Internal Affairs has budgeted of UGX 211.8 billion for agricultural supplies, KCCA has UGX 1.3 billion towards agricultural supplies which can be re-allocated to Ministry of Agriculture which also has a new Minister , Mr. Vicent Ssempijja who should also act fast to correct such uncoordinated movement of “troops”.
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