Experts suggest areas for budget cuts

Policy wonks and civil society players have suggested areas where, through “careful budget cuts”, the government can save up to Shs2.5 trillion -- enough cash to close around 50 percent of the funding gap created by the World Bank loan freeze.

Amongst their proposals is the option to not contract any new expensive infrastructure project in the short term; suspend some recurrent expenses on administration and retooling of public office spaces; and to withhold payment of allowances to public servants.

Sector players were responding to State minister for Finance, Mr Henry Musasizi, who yesterday put the country and MPs on notice about looming, though unspecified, budget cuts. Cuts could ensue after the US-based bank suspended loans to Uganda over the Anti-Homosexuality Act, 2023.

“Even the emoluments are going to be affected given the preliminary [assessment] we are seeing. We shall be coming in one week or so to tell you the consequences and ask for your approval on how we shall move forward in the current challenges,” he said.

It is unclear if in saying ‘emoluments’ the minister was referring to salaries or allowances. Under the country’s various laws, public sector pay is a statutory obligation. Any salary revisions would therefore necessitate far-reaching changes to particular laws and regulations.

Either way, the tough times ahead call for desperate measures. Mr Julius Mukunda, the executive director of the Civil Society Budget Advocacy Group (CSBAG), said the government must protect only those areas that are directly linked to the ordinary Ugandan, and which ensure essential public service delivery remains uninterrupted.

“The social sectors should be protected. [Government must] ensure that children go to school, medicines are in hospital for healthcare, ongoing water/sanitation projects keep running and that there is abundant support for agriculture. Also, it must ensure there is enough security in the country. The rest which can wait should be frozen at this moment,” he said.

Pipeline projects worth $1.8 billion (Shs6.7 trillion) have directly been affected by the World Bank decision.

The decision could also affect 2023/24 national budget financing. Up to Shs3.01 trillion of the total expected Shs8.3 trillion external financing for the current budget was linked to grants.

This newspaper has established that officials from the National Planning Authority will soon meet their Finance ministry counterparts to discuss possible areas for cuts without adversely affecting key social service delivery programmes. Officials from the ministry of finance who asked not to be named for them to speak freely confirmed this meeting is in the works.

The general forward-looking response of the various sector players Daily Monitor spoke to was for how to mitigate as opposed to buckling under foreign pressure.

Mr Ignatius Mudimi Wamakuyu, deputy chair of the Parliamentary committee on Budget last evening advised government to immediately suspend expenditure on foreign travel, workshops and other “wasteful areas”. “Statutory obligations like loan repayments, salaries and gratuity and vital sectors like health, education, agriculture should not be touched,” Mr Wamakuyu, who is also MP for Elgon County, said.

“If this fails, I advise the Executive to then revise the entire budget downwards by 20 or 30 percent, because even when we need all the items we have, this will be a crisis that we need to deal with,” he added.

The Elgon County legislator further advised the government to suspend all ongoing infrastructure projects like roads, school and health centre construction, among others.

Similarly, Mr Richard Ssempala, a senior lecturer of economics at Makerere School of Economics said the government must check all points of wastage.

“The cost of public administration is too high because we have so many irrelevant positions. There are a lot of duplications in roles and responsibilities of some agencies. This is the time for the government to actualise [its policy of] merging [and rationalisation] of agencies,” he said

Government in 2018 estimated to would save at least Shs1 trillion if it merged several of its agencies and departments to re-align their functions, prevent duplication of roles and wastage of public resources.

Mr Musasizi told MPs the option of budget cutting will be triggered if on-going negotiations with the World Bank do not succeed. At the same time, a senior technocrat, Mr Patrick Ocailap, the very experienced deputy secretary to the Treasury, said Uganda will explore all options, including finding other development partners in case World Bank sticks on its decision.