Finance Minister Matia Kasaija has emphasized the government’s need to refrain from constant reliance on borrowing to fulfill ongoing financial demands, many of which are subject to postponement, delay, or elimination. Addressing a pre-budget dialogue organized by the Civil Society Budget Advocacy Group for the 2024/25 financial year, Kasaija firmly communicated his commitment to avoiding perpetual borrowing, stressing the crucial aspect of preserving the nation’s financial stability. Despite the recurring emergence of new requests during Cabinet meetings, Kasaija underscored the significance of meticulous prioritization, recognizing that not all demands carry an immediate or indispensable nature.
In response to concerns voiced by civil society organizations regarding the mounting public debt and its impact on the economy amid sluggish tax revenues, Kasaija highlighted the enduring nature of supplementary budget requests over the past decade. This persistence continues despite prior government assurances to eradicate such practices, given their contribution to heightened borrowing and subsequent spikes in public debt.
As of June 2023, the Auditor General, John Muwanga, reported a substantial upswing in public debt, reaching Shs96 trillion. Domestic debt accounted for Shs43.6 trillion (45.4 percent), while external debt stood at Shs52.4 trillion (54.6 percent). The escalating public debt continues to strain domestic revenue, projected to decrease from Shs25.2 trillion in the 2023/24 financial year to Shs21.7 trillion in the 2024/25 financial year.
The allocation of substantial funds to debt servicing, a key budgetary component, is anticipated to rise to Shs3.2 trillion in the 2024/25 financial year from Shs2.6 trillion, diverting resources away from priority sectors of the economy.
Kasaija also addressed criticism from certain government officials who label him a “miser” for rejecting specific supplementary requests. He emphasized the inevitability of financial constraints, highlighting the importance of prioritizing sectors with a significant economic impact, recognizing that financial resources, irrespective of the amount, will never be sufficient for every sector.
For the 2024/25 financial year, the government has identified key priority sectors, including investments in human capital, infrastructure (roads), peace and security, electricity generation and transmission, and effective disaster management. Kasaija attributed fiscal indiscipline to ministries and government entities that fail to efficiently utilize allocated funds, stressing the necessity for prudent financial management.
Julius Mukunda, the Executive Director of the Civil Society Budget Advocacy Group, expressed concern about the economic consequences of escalating debt, urging the government to address issues such as imprudent borrowing and spending. He highlighted the potential for savings in areas such as domestic and international travel, entertainment, and welfare.
