Parliamentâ€™s finance committee has expressed concern over the Governmentâ€™s rising budget deficit, saying it would affect the countryâ€™s economic development.
â€œThe overall deficit more than doubled as a percentage of GDP from over 6% in 1997/98 to over 12% in 2001/02 and reduced slightly to 11.1% of GDP in 2002/03,â€ the committeeâ€™s draft report said.
â€œIt is projected at sh1.3b in 2003/4 and is expected to widen to 1,415.6b, exerting upward pressure on the exchange and interest rates constraining private sector development,â€ the report said.
According to the committee draft report on the macro-economic plan and indicative budget framework for 2004/5, the overall Government fiscal deficit is projected at sh1,305.2b in 2003/2004 and is expected to increase to 1.415.6b in 2004/05.
The MPs said the increased fiscal deficit had led to an increase in the net issuance of Government securities and sale of foreign exchange.
The report said the current fiscal deficit of 11% of GDP is large and there would not be any significant reduction.
â€œAlthough the $1.5b of loans which have been contracted from multilateral donors have been on high concessionary terms, they have doubled Ugandaâ€™s export debt ratio from 150% in 2002 to 35% as at the end of 2002/03,â€ the report says.
However, the finance state minister, Mwesigwa Rukutana, disputed the fears saying the reduction in the fiscal deficit would be achieved through reduced donor dependence and mobilisation.
Rising deficit angers MPs