Africa-Press – Uganda. In the just-ended first quarter of the financial year 2021/2022, Uganda Revenue Authority closed revenue collection account with a deficit of nearly Shs500 billion. This is just about half of the total budget allocation for Parliament.
But this is simply continuing trend, given that even before, domestic tax collections were already declining, thanks to Covid-19 constrained economic environment.
In recent financial years, specifically from 2018/2019, revenue collection declined from Shs16.1 trillion to Shs15.9 trillion in FY2019/2020.
In terms of domestic tax to GDP ratio, this decline corresponds to a reduction from 12.2 per cent down to 11.4 per cent over the same period.
This has led to the widening of the revenue deficit from 4.9 per cent in FY2018/20119 to 7.1 per cent in FY2019/2020 and to 9.9 per cent in 2020/2021.
With increased revenue pressures, public debt to GDP ratio rose to above the 50 percent threshold, arising from increased spending on health, stimulus packages, and social protection for the vulnerable.
As a result, the government budget strategy is crafted within an environment of Covid-19 induced shocks, which the Minister of Finance, Mr Matia Kasaija, said requires innovations and different ways of achieving results.
This seems to inform the recent communications (issued in July) from the Ministry of Finance, indicating total budget cuts to a tune of Shs2.6 trillion across government ministries, department and agencies.
According to a July 2 circular from the Finance ministry to all accounting officers, the budget cuts will also allow the government to generate emergency financing totalling Shs600 billion for Covid-19 response.
Mr Patrick Ocailap, the Deputy Secretary to the Treasury, said the “reprioritisation within the sector mandates accounting officers “not expected to warrant any funds against items such as travel, workshops and seminars, which the State Minister of Sports, later said impacted sports activities, which fall under travel abroad, negatively.
The circular to the accounting officers meant that Mulago National Referral Hospital, the biggest Covid-19 treatment centre in the country, would suffer a 0.1 percent budget cut. This is Shs40m against the Shs39.7 billion for non-wage and development.
But the Uganda Aids Commission, the agency leading the fight against a major killer disease, suffered a cut of Shs412 million, against their budget of Shs9.7 billion for non-wage and development.
Regional referral hospitals suffered a total 0.2 percent budget cut.
This is Shs314m cut against Shs131.4b budget for non-wage and development.
The National Medical Stores suffered Shs3.1b cut against their budget of Shs585b for non-wage and development.
The Office of the President suffered a Shs1.9b cut (1.5 percent) against their total budget for non-wage and development of Shs124b.
But the cut for State House budget was a bit higher at 2 per cent, (Shs8 billion), against their budget of Shs391 billion.
While at the Office of the Prime Minister, the budget cut was as high as 3.8 per cent (Shs4.3 billion from the relatively smaller budget of Shs114 billion.
Ministries of Justice and Constitutional Affairs, Foreign Affairs, Lands, Housing and that of Urban Development, and Uganda National Road Authority, among others, suffered 41.2 per cent budget cuts.
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