Members of Parliament sitting on both the National Economy and Budget committees are divided on whether or not to approve a government request to borrow money for budget support.
Government seeks to borrow 736 billion Shillings from the domestic market to finance supplementary expenditure and mitigate revenue shortfalls being experienced in the 2017/2018 budget.
According to the government, revenues recorded a shortfall of 324 billion Shillings in just the first half of the current financial year and the overall revenue shortfall by the end of the financial year is projected to hit 659 billion Shillings. The Government had projected to collect 15 trillion Shillings in revenue.
Part of the money, about 48 billion shillings, is proposed to cater for salary payments while the rest is for payment of contractors by Uganda National Roads Authority (UNRA) and buying food for the Uganda Police, the Army and Prisons.
Appearing before the committee on National Economy on Tuesday, the Finance Minister Matia Kasaija together with the state minister for Planning David Bahati were tasked to explain the need to borrow money for foreseeable reasons.
A section of the MPs sitting on the committee openly spoke against the proposed borrowing, sating that they are not to append their signatures in approval of the loan request while others threatened to draft an alternative report.
Amuria Woman MP Susan Amero criticised the explanation that the loan will go into purchasing food for prisoners, army and police officers, saying that the Uganda Prisons Service has chunks of land that has allegedly been leased to plant cotton.
The MP further questioned whether the finance ministry projected for recruitment of people or not.
“Why did the Permanent Secretary recruit without money? If we begin borrowing money for salaries, then we are finished. Minister Kasaija should resign for failing to manage resources that Ugandans have given to him,” said MP Amero.
Mukon South MP Johnson Muyanja Ssenyonga blamed government for poor planning saying that some heads of agencies in the country are richer than their entities with their salaries enough to pay those for a district.
“These excuses don’t hold water and shouldn’t be entertained. Anybody that decided to recruit when the salaries hadn’t been budgeted for should be held accountable,” said Ayivu County MP Benard Atiku.
The National Economy committee chairperson, former finance minister Syda Bbumba, noted that the proposed borrowing is a worrying situation since it is likely to cripple the private sector in the country.
Bbumba said that since banks don’t want to take too many risks knowing they have a client as Government, the private sector will be treated as second priority by commercial banks, a decision that will force the business community to borrow at high interest rates.
The budget committee chairperson Amos Lugoloobi also said that issues like payment of salaries cannot be unforeseen since they are planned for. He described government’s justification as illegal and wondered why accounting officers recruited midway the financial year, yet this particular item wasn’t budgeted for.
“We need a strong justification for this additional money. We have been warning this Government about the structure of their budget. We will find ourselves in a situation where we can’t finance wages. This is likely to persist unless we sit down and deal with the structural issues,” said Lugoloobi.
Lugoloobi cited a need for a long term revenue collection mobilisation to avoid revenue shortfalls in the future.
But Minister Matia Kasaija appealed to the legislators not to dismiss the borrowing saying that if for example he does not avail the 480 billion Shillings required by UNRA, government will pay 60 billion Shillings in penalties in the next two months.
The 480 billion is for on-going infrastructure projects whose certificates will fall due this financial year.
The State Minister for Planning, David Bahati, also explained that attempts were made to absorb the pressures that emerged following the shortfalls in revenue, where re-allocations were made to budgets of Ministries, Departments and Agencies in the third and fourth quarter, and all these left no more room for re-allocation to accommodate extra pressures.
He told MPs that the borrowing of 736 billion Shillings is needed to finance the budget to the end of the year to enable smooth running of Government operations.
Bahati tabled the loan request on the floor of Parliament on February 9 and was subsequently forwarded to the Committee of National Economy for scrutiny.