Namisindwa RDC Demands Full Audit of Government Projects
July 8, 2024
Parents challenged to prioritize visitation days
July 10, 2024
Show all

Shadow Finance Minister Blames govt over unutilized borrowed funds 

Shadow Minister Ibrahim Ssemuju Nganda recieve a certificate of recognition from certified accountants

The Shadow Minister for Finance as well as the Kira Municipality Legislator, Hon. Ibrahim Ssemujju Nganda, has blamed the government for failing to utilize some borrowed money from foreign and domestic banks. He revealed that the government has a debt of over Shs. 97.4 trillion but surprisingly it keeps on borrowing more money yet over Shs. 18 trillion remain unutilized every financial year.

He made these comments while addressing accountants from the Institute of Certified  public accountants of Uganda during the 12th CPA Economic Forum organized under the theme” Enhancing the Productive sectors for Sustainable Development.’

Hon. Ibrahim Ssemujju informed certified public accountants of Uganda that Uganda’s public debt constitutes 52% of the country’s Gross domestic product (GDP) and that recently the International Monetary Fund warned developing countries including Uganda whose debt burden has surpassed 50 % of the GDP of being in danger.

“Uganda is a very interesting country in that you find a minister qualified in drama heading the health ministry and the one qualified in health heading gender ministry.  That is the reason why government ministries are in total mess. The Auditor General in his report he presented to parliament last year put Uganda’s public debt to Shs 97.499 trillion which is 52% of Uganda’s Gross Domestic product. The finance minister says Uganda’s public debt is at Shs 86.79 trillion  46.9% of the country’s GDP while the Auditor puts Uganda’s debt burden at Shs 97.49 99trillion  50% of GDP.

“The finance ministry seems to make the country’s GDP sustainable and low because they want to borrow more money. According to the Auditor General’s report, external debt is at 52.6 trillion.  China alone contracted Uganda Shs 1.1 trillion daily in debt repayment and Shs 358 million in daily interest and in total China collects Shs 4.2 trillion  from Uganda in monthly repayments. Government has borrowed a lot of money and it’s not utilizing it and in total amounts to 4.8 billion USD equivalent to Shs.18.7 trillion,” Hon. Ssemujju disclosed.

“The government borrows money but it doesn’t utilize part of it. The money is borrowed for projects which are not designed.  For example over 600 million USD was borrowed from the African Development Bank to construct Kampala/Jinja Expressway. The government pays commitment fees annually worth Shs 443 billion for money borrowed and not utilized. MPs also just borrow and you find such a person with a borrowing habit is appointed a finance minister so expect him/her to keep borrowing.’

“Domestic arrears for those who supply the government stands at Shs 10 trillion. We also borrowed money to buy Covid vaccines and in the end we remained with over 5 million doses of Covid vaccines that expired. 

Hon. Ssemujju added that the current public debt can’t be serviced using money collected from revenue collection and asked the government to reduce borrowing more money.

“Our tax projection is at Shs 31 trillion but the growing debt burden now stands at Shs 34 trillion. In this financial year 2024/2025, we have more debts to repay than tax collection. Government fools people that it’s okay yet 47% of its budget goes to debt servicing. Teachers are sent to classrooms without chalk and they just go there for the sake of reaching the classroom and leave with almost no work done. My key concern is that we are borrowing money without utilizing it.  We have accumulated a debt which we are unable to pay using money collected from taxes. 

“The government of Uganda is behaving like an ordinary person and in the next financial year, it will borrow from the commercial bank Shs 12 trillion and will repay the same money to the same bank. There is no reason why you borrow money to provide yourselves with special meals and vehicles.

“In Uganda we don’t have an employment formula but in China they do employ more technical people than support staff but in Uganda this is not the case. For example the RDC when appointed comes with a driver and security guard but in actual sense he/she does nothing apart from going for talk shows. My proposal is to review the human resources available to the government. Therefore, if you borrow, don’t consume the money on eating and sleeping in executive hotels. We also need to stop buying everything for the president and his family so that he is able to understand what people go through. Let him use his salary to finance his personal needs plus his family.’  

“The theme for the financial year 2024/2025 is monetization of the economy through agriculture but for me, I propose the theme would have been budgeting for debt service,” Hon. Ssemujju disputed this year’s budget theme.

The senior research fellow as well as the head of macroeconomics department at the Economic Research policy Center, Mr.Corti Paul Lakuma, admitted that though the country is indebted, borrowing remains an essential part of government financing revealing that Uganda’s debt has increased considerably in the last decade. He however calls for policy review for better policy outcome.

“We are approaching a danger zone. Government has been borrowing over time since monetary policy issues were converted to resource mobilization instruments in 1993. The current public debt for the last financial year stands at 49.2% and not at 53% as stated by Hon. Ssemujju Nganda.

Mr. Lakuma also expressed pessimism that low value addition is likely to affect the rapid increase in the country’s exports.

“Government needs to build the capacity to do business. Majority of our domestic debt is long term providing a sense of security and stability. ‘

The commissioner for Economic development policy and Research at the Ministry of Finance, planning and Economic development, Mr. Joseph Enyimu, suggested that in order to overcome the big public debt, there is need to harmonize all the Productive sectors of the economy. He also expressed worry about low work productivity which has been declining since early 2000.

“Findings indicate that 64% of the agricultural sector engaged in non productive production. We need to increase the shares of individuals engaged in commercial agriculture. We are spending more than we can raise. We are borrowing much from China and 13% of our public debt is from China, “Mr. Enyimu expressed his concern.

Mr. Kenneth Egesa who represented Bank of Uganda said as the central bank they are focusing on total financial inclusion and that the bank is trying its best to ensure that affordable credit reaches the hands of people who need it.

Leave a Reply

Your email address will not be published. Required fields are marked *