Uganda's 2020/21 sh45 trillion budget unveiled

BUDGET DAY 2020

Live reporting by  Joseph Kizza
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4:26pm  |  Parliament adjourned

It is a brief delivery by the President, who ends by voicing a positive outlook of the economy.

Speaker Kadaga, following the President's remarks, closes the parliamentary session.

The Speaker adjourns the House to 16 June 2020 at 2.00pm. #UGBUDGET20 #PlenaryUg pic.twitter.com/1CrSt9c4AF

— Parliament of Uganda (@Parliament_Ug) June 11, 2020

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4:15pm  |  Museveni not happy with tax collections

The President points out that he is not happy with Uganda's tax to GDP ratio of 14.3%. He argues that this is among the lowest on the continent, saying that some countries realise a ratio of as much as 18%.

"There has been a lot of corruption in the URA [Uganda Revenue Authority], that one I have cleaned. Like we shall do in other areas," he vows.

He says that Uganda's low tax returns means more borrowing.

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4:05pm  |  Backing local producers

Museveni says that while some people have voiced pessimism over the economy, he is optimistic - despite the coronavirus crisis throwing the spanner in the works of such sectors as tourism.

He says that the emergence of COVID-19 has awakened the Government's desire to support domestic production.

"We are going to be very strict on import substitution," he says, adding that he is glad that minister Kasaija talked of increasing taxes on imports. "We are also going to promote export promotion."

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4:01pm  |  On regional security

President Museveni maintains that Uganda is "stable and nothing can disturb us here" and that "no-one can disturb our peace here".

He urges his regional counterparts to work together to emsure that peace is maintained across the region.


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3:54pm  |  Some cases were erroneously classified as positive

The President is keen to re-iterate his warning to Ugandans to exercise caution against the deadly COVID-19. "We are winning this war if only everybody listens," he says.

Meanwhile, giving an update on Uganda's coronavirus statistics, he says that as of June 10, Uganda's positive cases total 679. But recently, he adds, it was found that some of the cases were erroneously classified as positive "due to carelessness" of some technicians.

He asks health minister Dr. Ruth Aceng to clarify whether the said cases are part of the 679 number or not.

As many as 117 people have been discharged after recovering from COVID-19.


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3:45pm  |  President Museveni begins his address

Following the finance minister's presentation, Speaker Rebecca Kadaga invites the President to make his remarks virtually - from State House.

Starting off, Museveni pays tribute to the three fallen dignitaries: Burundian president Pierre Nkurunziza, Uganda's ambassador to UN Onyanga Aparr and Maj. Gen. Kasirye Ggwanga.


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3:42pm  |  Uganda's economic outlook 'positive'

In his conclusion, the finance minister strikes a tone of optimism, underlining that Uganda's economic outlook is positive.

"The coronavirus pandemic has helped us to once again demonstrate the economic capacity and the vast opportunities that our country has. The budget for the financial year 2020/21 will support the economy to fully recover, harness the potential that we have, and get back to our progressive journey of double digit GDP growth rate," he says.

"I call upon Ugandans to ensure they keep safe by particularly following the directives from His Excellency the President and Ministry of Health regarding CoVID-19. The challenge of CoVID-19 will go, and the economy will pick up once again even at a much higher speed."


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3:37pm  |  Resource envelope and allocations for 2020/21

Minister Kasaija underlines that the resource envelope of 2020/21 is sh45.493 trillion, of which domestic resources amount to sh25.585 trillion.  Domestic financing amounts to sh3.560 trillion.

External financing consists of Project Support of sh9.515 trillion and General Budget Support sh2.906.7 trillion. Domestic re-financing amounts to sh7.486 trillion and Appropriation in Aid is sh215.6b.

The minister adds that total expenditure amounts to sh37.792 trillion of which recurrent expenditure is sh19.787 trillion and development expenditure is sh18.004 trillion.

"Sector allocations can be found in the Budget as approved by Parliament," says Kasaija.

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3:32pm  |  Public debt

We learn that Uganda's total public debt as at December 2019 amounted to $13.3b, with external debt accounting for $8.59b or 64.4% while domestic debt amounted to $4.74b or 35.6% of total debt stock.

"To ensure that public debt remains sustainable, we will implement the Domestic Revenue Mobilization Strategy to increase Government's capacity to finance programs with less reliance on domestic and external borrowing," says Kasaija.

"In response to the coronavirus crisis, Government has commenced negotiations with some creditors for debt relief. This will free resources to finance interventions in the fight against the pandemic."


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3:26pm  |  Revenue target for 2020/21

"Government is developing an Integrated Financing Strategy to guide and monitor how we appropriately raise domestic revenues, and both domestic and external debt financing over the NDP III period," says Kasaija.

"Domestic revenue measures for next financial year are anchored on the Domestic Revenue Mobilization Strategy (DRMS), which aims to mobilise sufficient revenue to support infrastructure development and social welfare," he adds.

The 2020/21 financial year's revenue target is sh21.810 trillion, comprised of tax revenue amounting to sh20.219 trillion and non-tax revenue of sh1.591 trillion. "This target, the minister says, translates into a revenue effort of 14.3% of GDP".

To hit this target, new interventions have been laid out.

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3:24pm  |  Dealing with corruption

So what is in Government's plan to address the challenge of corruption?

Here are the measures:

Enhance the efficiency and effectiveness of oversight and anti-corruption institutions in identifying areas of risk

Strengthen implementation and follow-up on audit recommendations;

Srengthen implementation of Public Finance Management  rules and regulations and the role of Internal Audit

Enhance capacity of the Financial Intelligence Authority and related security agencies to intensify surveillance and gathering of vital information  to curb anti-money laundering and terrorism financing.


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3:21pm  |  Peace, security and good governance

Government plans to continue improving peace and security, the rule of law and good governance.

It plans to do so by promoting peace and security at the community and national level, enhancing effectiveness in public service delivery and increasing access to justice.

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3:16pm  |  Enhancing economic infrastructure

Some of the measures include carrying out emergency maintenance of roads and bridges across the country and expediting construction of priority industrial parks and special economic zones.

Minister Kasaija says there are plans to also expand the feeder and national road network, power, as well as ICT infrastructure


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3:13pm  |  Stabilising the financial sector

The finance minister re-echoes the central bank's pronouncements on measures being implemented to mitigate risks to overall economic growth, and also ultimately support the financing of businesses.

One of the moves is to provide adequate capital buffers for supervised financial institutions.

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3:12pm  |  Tax relief for businesses

To address the short term emergency liquidity requirements of businesses, boost their cash-flows, and ensure business continuity, the minister proposes the following tax relief measures:

• Defer payment of Corporate Income Tax or Presumptive tax for Corporations and Small, Medium Enterprises (SMEs)
• Defer payment of PAYE by sectors affected
• Waive interest on tax arrears
• Provide for Tax Deductibility of Donations for the Corona Virus Response.
• Expedite Payment of outstanding VAT refunds

Kasaija says which he will present the proposes to Parliament in due course.


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2:59pm  |  Education

To enhance the education sector, the Government plans to:

• Roll out the new education curriculum

• Expand access to vocational education

• Improve the quality of tertiary education

• Enhance digital instruction in schools and also provide instruction through the electronic delivery mode (radios, TVs and Internet)


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2:53pm  |  Improving welfare of Ugandans

The minister says that one of the strategies by Government in the forthcoming financial year is to ensure food security and good nutrition. The minister says that the coronavirus has brought to fore the need to ensure adequate food security and nutrition.

Part of the plan is to sensitize Ugandans on the benefits of good nutrition.

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2:41pm  |  Rain invasion

Minister Kasaija has to pause his speech as a mid-afternoon downpour disrupts proceedings inside the makeshift Parliament. Minutes later, as the organisers scramble to salvage the situation, the minister carries on with his speech.

On transport, he talks of the increase in the paved road network to 5,000km up from 4,000km in the previous year. In ICT, he indicates that Internet users have increased from 7.5 million last year to 11 milion in March 2020.


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2:30pm  |  Economic growth slowed

The 2020/21 national budget is based on the theme: Stimulating the economy to safeguard livelihoods, jobs, business and industrial recovery.

Kasaija says that Uganda's GDP is expected to grow to sh138 trillion in the forthcoming financial year. He reports that the economy grew by 3.1% in the 2019/20 financial year, which was slower than the 5.4% in the previous years.

Meanwhile, the minister strikes a tone of optimism when he reports that agriculture grew by 4.2% in the financial year ending June 30 while the services sector grew by 3.6%.


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2:26pm  |  The coronanvirus crisis has affected the economy

Last year's budget was read on June 13. This year, the finance minister is presenting it 11 days into the same month.

Starting off with the preamble, Kasaija let's us know that in accordance with the Constitution of Uganda, he presented the 2020/21 budget proposals to Parliament 2020, after which the legislators reviewed and approved the budget that he is set to read today.

His statement is presenting an economic  and development context under which the budget was prepared and also underlining the priority actions that support the allocations appropriated by Parliament.

"Madam Speaker, today, we face unprecendeted times [due to the coronavirus pandemic]," starts the minister, who adds that the economy has been significantly hit.

But he underlines that the crises that have hit Uganda cannot derail the country's long-term strategic plan to lift its economy.


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2:21pm  |  Minister begins reading the budget

For item 5 on the order paper, finance minister Matia Kasaija is invited to present the highlights of the national budget on behalf of the President.

Before getting down to the task at hand, he asks the Speaker to be allowed to lower his face mask so that he is more audible.


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2:17pm  |  Paying tribute to fallen dignitaries

In item 3 on today's order paper, Speaker Kadaga has proclaimed that Parliament is sitting at the Parliamentary building to receive the national budget from President Yoweri Museveni.

She is keen to indicate that the financial year 2019/20 will end on June 30.

Kadaga also mentions the high-profile people that have died in recent days, including Burundian president Pierre Nkurunziza, Uganda's ambassador to UN Onyanga Aparr and Maj. Gen. Kasirye Ggwanga.

The legislators rise to observe a moment of silence in tribute to the fallen dignitaries.

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2:07pm  |  Parliamentary session under way

Weare under way at Parliament, where the national budget will be delivered. The session is chaired by Speaker Rebecca Kadaga. Time for anthems now, followed by prayers.

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1:58pm  |  The man with the briefcase

All eyes will be on finance minister Matia Kasaija. A little while ago, he arrived at Parliament on a hot Thursday early afternoon. He will deliver the budget statement before Parliament on behalf of President Yoweri Museveni.

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1:52pm  |  Your budget

Of course the effects of the coronavirus crisis have crept into our pockets. What adjustments have you had to make as a result?

💰💳 YOUR BUDGET

How has the #coronavirus😷 crisis affected your personal or business budget? And how have you had to adjust?#VisionUpdates #UGBUDGET20 pic.twitter.com/XvaGrAccFZ

— The New Vision (@newvisionwire) June 11, 2020

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1:40pm  |  A 12.36% increase

Analysis by Henry Sekanjako:

Just like the State of the Nation Address delivered last week by the President, the budget speech will be delivered virtually as President Museveni will not be present in Parliament where MPs and other invited guests will assemble. Helen Kaweesi, Parliament's acting director of communication and public affairs, said the President will deliver his speech virtually - from State House.

But what do you know about the next financial year's budget which comes at a time when the country's economy has been badly hit by the coronavirus (COVID-19) pandemic?

On April 24, the House, chaired by Speaker Rebecca Kadaga, passed the Appropriation Bill 2020, approving a sh45.5 trillion national budget for the next financial year 2020/2021. In accordance with Article 156 of the Constitution, Parliament is mandated to approve the national budget by May 31, before the start of a new financial year.

The 2020/21's budget represents a 12.36% increase (about sh6 trillion) compared to the current financial year's sh40.5 trillion.

The largest proportion of the 2020/2021 budget will be financed domestically by up to 72.5%, going by the Appropriation Bill. Part of the domestic financing will include revenue collection amounting to sh21.7 trillion and sh3.55 trillion in domestic borrowing. External support will be 27.5%.

According to the Appropriation Bill, sh11.9 trillion is for recurrent expenditure, sh18.076 trillion for development expenditure and sh15.494 trillion for statutory expenditure.

According to a report by the Parliament's committee on the budget, the total revenue as a ratio to Gross Domestic Product (GDP) is projected to increase marginally from 13.4% in FY 2019/2020 to 13.9% in FY 2020/21. The committee recommended that the Government strengthens the mobilisation and collection of revenues, which have stagnated below 16% of GDP for the past years.


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1:30pm  |  It's Budget Day!

Good afternoon everyone, it's mid-year, and what a year it has been! We are only half-way into it but on the evidence of what's happening around the world, with the marauding, deadly Novel coronavirus on everyone's lips, you would be forgiven to think we have already exhausted the 12 months of the forgettable year 'twenie-twenie' (2020).

Anyways, welcome to today's live text coverage of Budget Day. A big day for an economy that has not been spared the COVID-19 pandemic onslaught. Finance minister Matia Kasaija, who also represents the people of Buyanja County in Parliament, is set to read the national budget for the financial year 2020/2021 on behalf of President Yoweri Museveni. At sh45.5 trillion, it is Uganda's biggest budget ever. 

Kasaija will deliver this budget at the fifth and final session of the 10th Parliament under the theme: Stimulating the economy to safeguard livelihoods, jobs, business and industrial recovery.

Indeed, Uganda will surely use some economic resuscitation.