Prime
Govt should cut costs but spend wisely
The Permanent Secretary in the Finance Ministry, Mr Ramathan Ggoobi, addresses the media in Kampala in April. His ministry on July 16, 2024 released Shs5.899 trillion for quarter one of the Financial Year 2024/2024. PHOTO/COURTESY OF FINANCE MINISTRY
What you need to know:
- The issue: Govt spending
- Our view: This week, the Ministry of Finance has released Shs6 trillion of budgeted funds for first quarter spending. The monies ought to be properly utilized to avoid the need for supplementary spending or the indiscipline of poor accountability and corruption. Government action should be at par with its rhetoric.
In February last year, the chief accounting officer in the Ministry of Finance, Planning and Economic Development, Mr Ramathan Ggoobi announced via a government circular, several austerity measures to stem the rising public debt and reduce funding deficits.
The measures included freezing hires and pay enhancement alongside halving spending on foreign travel and a ban on non-essential expenditures in general. The measures also included a ban on extra borrowing that would make the already heavy debt burden unbearable. Vehicle purchase was to be reduced by 50 per cent, among others.
More than one year later, the 2024/25 budget totalled 72 trillion, a whopping Shs20 trillion over and above the previous budget. While the will is there to cut spending in some areas, the government appears to be cutting from some sectors with one hand and simultaneously shifting the spending elsewhere.
Included in the budget speech of 2023/24, the Finance minister Mr Matia Kasaija listed one of the initiatives for managing our debt sustainably as controlling government expenditure to allocative efficiency.
Some of the standout areas that have been flagged as chronic pain points include underspending in particular budgeted sectors, leading the taxpayer to bear the brunt of loan interest payments on underutilised or unutilized monies. There are project execution gaps arising from projects being included in the budget before they are ready to be implemented. Debt financing and management still consumes a substantial part of the national budget.
While novel initiatives are being mooted to cut government spending, borrowing continues to grow and try as it may, the government is having a hard time plugging the hole that continues to consume what meagre revenues are collected alongside the development that these funds would have otherwise delivered.
Three per cent of the 2024/25 budget constitutes items that could qualify as wasteful expenditure, including special meals and drinks (Shs300b), welfare and entertainment (Shs137b), travel abroad (Shs113b), official ceremonies and state functions, bedding, clothing and assorted related items (shs134bn), among others. In 2023, many of these items would have made the cut for Mr. Ggoobi’s austerity plan. To its credit, the finance ministry implemented its cost-cutting plan vigorously for some sectors such as travel.
This week, the Ministry of Finance has released Shs6 trillion of budgeted funds for first quarter spending. The monies ought to be properly utilized to avoid the need for supplementary spending or the indiscipline of poor accountability and corruption. Government action should be at par with its rhetoric.
