The Minister of Finance, Planning and Economic Development, Matia Kasaija is no doubt facing hard times lately.
Following government of Uganda’s request to borrow domestically Shs736bn to pay salaries of civil servants, MPs have asked Minister Kasaija to resign for failing to manage resources entrusted to him.
The loan request was tabled on the floor of Parliament on 9th February 2018 by David Bahati, State Minister for Planning and was subsequently forwarded to the Committee of National Economy for scrutiny.
Appearing before the Committee on Tuesday, Kasaija and Bahati shockingly revealed that the money will come from domestic borrowing and is needed to cover the revenue shortfall experienced by Government.
Kasaija said part of the money will be used to purchase food for prisoners, army and police officers.
However, their explanation angered the MPs, arguing that the decision to borrow domestically will adversely affect the already struggling private sector that is finding it hard to access credit from banks.
Amuria Woman MP, Susan Amero wondered why prisons should be buying yet the institution has chunks of land that has been leased to big shots in Government to plant cotton. She wondered whether prisoners eat cotton.
“Did you project for the recruitment? Why did the Permanent Secretary recruit without money? If we begin borrowing money for salaries, then we are finished. Kasaija should resign for failing to manage resources Ugandans have given to him,” said Amero.
Amos Lugoloobi, Chairperson of the Budget Committee termed Government’s justification as illegal wondering why accounting officers recruited midway the financial year, yet this particular budget item wasn’t budgeted for.
“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,” Lugoloobi warned.
However, Bahati explained that the overall revenue shortfall by the end of the FY 2017/2018 is projected to amount to hit Shs659Billion with Government having projected to collect Shs15Trillion in revenue.
“Government revenues excluding appropriation in Aid in the first half of the financial year, recorded a shortfall of Shs324Billion. This shortfall is on account of the lower collections for VAT, international trade, income and excise taxes which recorded shortfalls of Shs139.04Billion, Shs95.18Billion and Shs49.67billion respectively,” he said.
The Ministry went further stating that attempts were made to absorb the pressures that emerged following the shortfalls in revenue, where reallocations were made to budgets of Ministries, Departments and Agencies in quarter 3 and 4, and all these left no more room for reallocation to accommodate extra pressures.
Bahati added that the extra borrowing of Shs736billion is needed to finance the budget to the end of the year to enable smooth running of Government operations.
On why Government has opted for domestic borrowing, the Finance Ministry said the decision was aimed at dealing with the time constraint and the lengthy procedures involved in securing external financing.
Documents tabled before Parliament indicate that the money is intended to service shortfalls on salaries and wages, security, social assistance, grants empowerment, energy, pensions and gratuity.
He however stressed that only Shs48Billion will be needed to meet the shortfall on salary and this is due to recruitment after the 2017/2018 budget.
Former Finance Minister, turned National Economy Committee Chairperson Syda Bbumba remarked that the move by Government to borrow domestically is likely to cripple the private sector.
She said that because 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.
Mukon South MP, Muyanja Ssenyonga blamed Government for turning Uganda into a laughing stock by borrowing to pay salaries, yet some Ministries and Agencies heads are richer than their entities, whose wealth is huge enough to pay salary for districts.
However, Kasaija warned Parliament against dismissing the loan request saying it would come along with dire consequences since UNRA is in need of Shs280Billion that would be used to pay certificates of contractors who have threatened to lay down tools.
“Don’t dismiss this borrowing, because if you do, and I don’t pay the UNRA certificates, in the next two months, I will pay Shs60billion in penalties. Shs280Billion will be used by UNRA to pay out certificates to contractors who are threatening to lay down their tools,” warned Kasaija.
It was MP Guma Gumisiriza who told off MPs for threatening to reject the loan, “We should sympathize with the Minister. We shouldn’t dismiss the request simply because a few mistakes have been made. He isn’t asking this money to take to his constituency.”
