Minister of Finance, Matia Kasaija
The Government is intending to borrow 1.73 trillion Shillings to finance the country’s development and infrastructure budget for the current financial year.
Our reporter has learnt that the Minister of Finance, Matia Kasaija has already submitted to Parliament a formal request to borrow money from the Standard Chartered Bank and other financial institutions.
The National Economy Committee has also been notified of a meeting on Monday to urgently consider the government request.
“Notice is hereby given that the committee on National Economy will have a meeting with the Ministry of Finance to consider the urgent assignment of scrutinizing the request by the government to borrow up to Euro 455.03 million to finance the development and infrastructure budget for the financial year 2022/2023,” a notice to the MPs reads.
According to the meeting notice, the National Economy committee is expected to present a report to parliament on Wednesday, November 2, 2022.
Since the new financial year started on July 1, 2022, there has been an apparent lack of resources as several government entities continue to report shortages in staff salaries, and development budget, among other expenditure limitations.
In the first quarter of the financial year, only 10.25 trillion Shillings out of the expected 14.57 trillion Shillings were released by the Ministry of Finance creating a deficit of 4.3 trillion Shillings. The first quarter of the financial year runs from July to September.
Documents before the Finance Committee of parliament authored by the Minister of State for Finance, Henry Musasizi revealed that 5.62 trillion of the 10.25 trillion Shillings released went to debt and interest payment and the remaining 4.67 trillion Shillings was released for discretionary expenditure by MDAs.
A breakdown of the released funds shows that 1.603 trillion Shillings catered for wages, 1.813 trillion Shillings for non-wage, 596.7 billion Shillings for the Development budget, and 661.9 billion Shillings for arrears. There was zero development expenditure release except for the Ministry of Defense, State House, Ministry of Works, and Uganda Revenue Authority -URA equipment.
But while releasing money for the second quarter of the budget early this month, the Permanent Secretary of the Ministry of Finance, Ramathan Ggoobi said that the government withheld substantial amounts of funds which were supposed to be released in the first quarter of the financial year 2022/2023, as a way of controlling the count of money in circulation.
He said that this fiscal action came as a way of supplementing the Bank of Uganda’s monetary policy where it increases the interest rates to tame the demand for loans by the public.
For the second quarter, the Ministry released a total of 7.3 trillion Shillings and Ggoobi explained that the government was not broke when it failed to release all the budgeted funds for the last quarter. Ggoobi said that the economy was recovering, but challenges like the rising foreign exchange rate and high inflation were affecting this recovery.
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