Prime
Govt to cut travel budgets, seeks Shs600b to solve oxygen crisis
Government says budget cuts will mainly affect allocations for both outside and inland travel, conferences, seminars, workshops and meals in different government institutions. PHOTO/RACHEL MABALA
What you need to know:
- The country, has among others, grappled with an acute shortage of oxygen, amid a resurgence in Covid-19. The budget cuts will seek to raise funds money to procure more oxygen plants and vaccines.
Finance Minister Matia Kasaija has said government will seek to raise Shs600b from within budget cuts for different allocations to provide emergency funds to facilitate the Ministry of Health in partly dealing with the current runaway oxygen crisis and surging Covid-19 cases.
Speaking in Kampala yesterday, Mr Kasaija said budget cuts, although will create delay in planned projects for the 2021/22 financial year, were necessary in the face of a crisis resulting from Covid-19, noting that the Shs600b will help the Ministry of Health to solve shortage of oxygen by procuring more plants as well as supporting the procurement of more vaccines.
“We have reached a level that is uncomfortable. Once you go beyond 50 per cent of GDP you have to be very careful. So we are extremely very conscious about our debt. So we are going to raise the Shs600b by cutting our budget, we are not borrowing any money,” he said.
Mr Patrick Ocialap, the deputy secretary to the Treasury, said public debt is, in the 2021/22 financial year, expected to reach 51.9 per cent of GDP, noting that the estimates include the money which IMF has approved in budget support for the 2021/22 financial year.
The budget cuts, Mr Ocialap said, will mainly affect budget allocations for both outside and inland travel, conferences, seminars, workshops and meals in different government institutions.
Under the 2021/22 budget, government is expected to incur a domestic revenue shortfall of Shs2 trillion due to the current lockdown.
During the same briefing, Dr Michael Atingi-Ego, the Bank of Uganda deputy governor, said that unlike popular belief the money that has been advanced to Uganda by the International Monetary Fund (IMF) is not meant to finance Covid-19 related costs but facilitate economic recovery post Covid-19.
IMF, he said, deals with economic policies and structural reforms that seek to generate resources to enhance economic recovery.
“The IMF money plays a role of facilitating recovery of the economy and generating additional resources to support the economy,” he said.
The money, approved under the IMF Extended Credit Facility, according to the Ministry of Finance, will mainly go into reforms to increase domestic revenue, foster public sector efficiency and strengthen governances while preparing the ground for sound management of oil revenues as well as strengthening monetary policy and financial inclusion.
“In the first year, the government will focus on ensuring debt sustainability while increasing social spending, including for vaccines. The programme will also ensure the implementation of the domestic revenue mobilisation strategy, better management of public investment, control of domestic arrears as well as improving budget execution,” Mr Kasaija said, noting that the three year programme will run between 2021 and 2024 in which resources will be disbursed in seven tranches.
IMF cash is timely
According to Mr Kasaija, whereas there has been an uproar about the approved money from the IMF, it come in at a time when the economy is facing a number of headwinds affected by external and domestic shocks, many of which are related to Covid-19.
The shocks, he said, have seen the economy declined from 6.8 per cent in the 2018/19 financial year to 3 per cent in the 2019/20 financial year.
“Despite these shocks, the economy was on the path to recovery although this may slow down due to the impact of the second wave of Covid-19 that has led to a second lockdown,” Mr Kasaija said.
