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David Cowan, Citigroup Inc.’s Africa economist, has advised governments to exercise caution when resorting to supplementary budgets as a regular fiscal tool.

In an interview with the New Vision on April 24, Cowan noted that African governments should practice fiscal prudence and move away from the prevailing trend of frequent supplementary budget allocations.

“The battle after COVID is bringing fiscal deficits down. Supplementary budgets should be an emergence, not something that happens every year. When you have a budget, you stick to it. You have to go back to your basics. Why do you have a budget? It determines what you spend,” Cowan said.

In fiscal year 2023, Parliament received sh3 trillion in supplementary spending requests to support local governments and the health, security, and education sectors, according to a World Bank report. 

Though down from sh4.4 trillion (or 8.5% of the approved budget) in FY2022, the requests were still above the 3% statutory limit established in the Public Financial Management Act.

Addressing concerns regarding the complexity of presenting supplementary budgets in Uganda, Cowan noted the challenges in understanding their implications, even for seasoned economists.

David Cowan, Citigroup Inc.’s Africa economist during the interview with New Vision. (Photo by Ali Twaha)

“The real problem about Africa is always about fiscal policy which comes out with much bigger lags to know what’s really happening. If you had a criticism of the ministry of finance here, supplementary budgets are very complicated and how they present them. Even as an economist, I struggle to understand how they are presenting them,” Cowan said.

Cowan urged governments to develop contingency plans for addressing projected revenue shortfalls instead of relying exclusively on supplementary budgets.

“You need a contingency plan not a supplementary. What happens when your revenues don’t reach the level that you thought it would reach? Where do you go from here? That’s different from a supplementary. Having contingency planning in fiscal situations is quite important,” he said.

According to the World Bank, the accumulation of domestic arrears and the use of supplementary budgets for Uganda continue to pose challenges for fiscal management, damaging the credibility of the budget process.