Joseph Muvawala, the Executive Director at NPA
The National Planning Authority (NPA) has called on Government to halt construction of all new road projects in order to allow Uganda’s economy that has been battered by Covid to recover and contain the public debt.
The precaution was made yesterday by Joseph Muvawala, Executive Director NPA while appearing before Parliament’s Budget Committee to present the Authority’s position paper on Uganda’s Charter of Fiscal Responsibility.
Muvawala said that Government doesn’t have enough resources to implement all it wants because Uganda has suffered out of Covid, the demands of the project are too much and halting new projects will help Government plan better for other projects in the future.
He said this will allow Government to plan for other projects and allow other sectors of the economy to grow.
“We aren’t saying reallocate resources from infrastructure, we are saying we don’t have enough resources therefore, implement those projects that we started and complete them it makes simple logic. You don’t touch a project, leave it and start another one without completing, so we are advising let us concentrate on finishing what you started,” said Muvawala.
In the Monetary Policy Report for the period ended August, Bank of Uganda revealed that the stock of public debt had grown from USD17.96Bn equivalent to Shs65.83Trn as of June 2020 to Shs70.3Trn as of June 2021 representing an increase of Shs4.47Trn.
Some lawmakers backed NPA like Peter Omara (Otuke County) welcomed the proposal by NPA saying it is appropriate because most of the road construction and development projects have been done on the bedrock of loans.
“What NPA is saying is that for us to achieve the fiscal rule of 49% debt to GDP ratio, we must cut down on debt, raise domestic revenue and avoid new projects that will allow us to go and borrow because if you go outside there and borrow money, the debt ceiling will continue to be blown,” said Omara.
Muwanga Kivumbi (Butambala County) argued that a mere road built can’t spur growth of an area on its own, otherwise the people of Masaka Road who have been having a tarmacked road for the last how many years, would be so wealthy.
He said, “If you are borrowing to create infrastructure of a lifespan of average of 15 -20years and your debt repayment schedule is going above 93years for us to be able to pay, it may not make sense. It may increase the happiness index, you pass by and people say we are happy because we are roasting cassava or our goats are sitting on a tarmac road but the overall benefits may not be what is called for.”
Although Julius Mukunda, Executive Director of Civil Society Budget Advocacy Group (CSBAG) concurred with Muvawala, he said the whole issue will be solved by establishment of a debt ceiling to contain Government appetite for loans.
He said, “In fact for us we are proposing a debt ceiling that Government should have a debt ceiling on how much you can borrow, if you want to break it, come and seek permission first on why you want to break it and for what purpose. But we need a ceiling to tame government appetite on borrowing for everything.”
Meanwhile, Mukunda called for the establishment of a fiscal council that will act as a new agency to oversee the taxation and expenditure of public funds by Government.
He said the Fiscal Council will lay out the rules of the game and ensure that the rules are monitored and enforced, “The rules are okay however, the implementation has got a very big challenge because we don’t have that mechanism in place. You need somebody outside the system independent to determine how the rules will be enforced and reported.”
However, Kivumbi had misgivings about the proposal saying this would act as breeding ground for Parliament not to carry out its oversight role on public expenditure but rather, emphasis should be put on funding the Auditor General, Parliament Budget office rather than set up a new agency.
“It is Parliament that isn’t doing its work. Any deviation has to have the approval of parliament, parliament can’t walk away. It has approved the loans, supplementary budgets, it approves the obnoxious budgets. Will fiscal council determine the efficiency of parliament legislation? Parliament went to sleep, failed to do its role, we pass these excitedly,” said Kivumbi.
“All these structures that are ballooning government, parliament approves them. We want more districts, cities, town councils. Do we need a fiscal council, we just need this parliament to style up,” said Kivumbi.