How supplementary budget requests cripple economy 

The World Bank says that whereas supplementary spending had declined to about 5.7 percent of the budget in the 2022/23 financial year, the trend has since reversed, which undermines public financial management and heightens macroeconomic risks. 

In details presented in the 23rd Edition of the Uganda Economic Update, the World Bank, said over the three quarters ended March 2024, supplementary spending amounted to Shs4.54 trillion, or 8.9 percent of the budget for the 2023/24 financial year, a large chunk of which went to Ministry of Science, local governments, State House, Ministry of Energy, National Identification & Registration Authority. 

The requests, World Bank said,  were used by different government entities to finance investments in a private pharmaceutical - DEI BioPharma - startup costs for Karuma power plant, and procurement of a National Security Information System among others. 

“Resources for these activities could have been allocated through the annual budget, and they likely fail to meet the definition of “unavoidable and unforeseeable” costs that would justify supplementary spending ... in addition to distorting the budget, supplementary spending reduces the transparency of the budgeting process, alters expenditure priorities [and] undermine the credibility of planning and budgeting,” the report reads. 

While State House and Ministry of Defense have tended to be the traditional beneficiaries of supplementary spending, the report notes, the practice has spread across ministries, departments, and agencies, which implies “it has become the norm for budgeting”.  

During the 2023/24 financial year, supplementary spending rose exponentially, exceeding the money government spent on health and agriculture in the financial year. 

Details further indicate that of the Shs4.54 trillion used in the three quarters to March, 68 percent was borrowed, 17 percent came from budget cuts, 13 percent was borrowed externally and 1 percent came from additional funding.  

The funding structure, which is dominated by borrowing, the World Bank says “has adverse implications for debt management”, undermines public financial management, and heightens macroeconomic risks. 

“A large share of this borrowing is domestic, which crowds out credit to the private sector. In some cases, the additional costs are offset by internal budget cuts, which disrupt the implementation of approved programmes and investments and may increase domestic arrears,” the report reads in part. 

Ministry of Finance Permanent Secretary and Secretary to the Treasury Ramathan Ggoobi has previously indicated that government was taking different measures to mitigate the habit of supplementary requests, amid an increase in financing needs across different government entities. 

Monitor could not readily get a comment on how government plans to mitigate the increase in supplementary requests. 

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