Finance Minister Matia Kasaija has presented the national budget strategy for the fiscal period 2024/2025, indicating that the country expects only modest revenue growth during this time.
In a conference held at Kampala Serena Hotel, Minister Kasaija disclosed that Uganda’s total financial resources for the upcoming fiscal year will reach Shs52.722 trillion, a figure quite similar to the current fiscal year’s resources.
The announcement was made during the presentation of Uganda’s Budget Strategy for the Financial Year 2024/2025. The minister informed the audience that domestic revenue is predicted to experience only a slight increase compared to the current year.
Revenue for the next fiscal year is projected to be approximately Shs29.957 trillion, up from Shs29.672 trillion this year, signifying a growth of just over Shs200 billion.
This financial reality has immediate implications, impacting the government’s ability to allocate resources to various socio-economic programs due to substantial debt servicing costs.
Minister Kasaija also discussed next year’s budget theme, which remains consistent with the ambitions of the outgoing year: ‘Full Monetisation of Uganda’s Economy through Commercial Agriculture, Industrialisation, Expanding and Broadening Services, and Digital Transformation and Market Access.’
To achieve these aspirations, Mr. Kasaija stated that government priorities will be funded within the framework of the fiscal consolidation agenda, which was emphasized in this year’s budget speeches.
Although the minister did not directly reference the potential adverse effects of the World Bank’s August announcement of a freeze on loan financing, his remarks seemed to acknowledge the financial gap created.
The freeze has removed slightly over Shs6.7 trillion in project and development financing, largely due to Uganda’s new and widely debated law criminalising homosexual activity. In response, the government has pledged to reduce wasteful spending, implement stricter austerity measures, and seek increased cooperation with less problematic development partners.
Mr. Kasaija cautioned, “As we commence the budgeting process for FY 2024/2025, we must consider resource limitations, including domestic revenue and limited borrowing capacity. Therefore, the ministry will be unable to accommodate all Ministry, Department, and Agency (MDA) priorities.”
Despite the prevailing difficulties, Mr. Kasaija remained optimistic about future prospects. He stated, “The implementation of strategic interventions, such as the Parish Development Model, development of the minerals sector, agro-industrialisation, and manufacturing, among others, will spur economic growth to 6 percent by the end of FY 2023/24 and to 6.5 percent in FY 2024/2025.”
Mr. Kasaija further anticipates an acceleration in the average economic growth rate to at least 7 percent over the medium term, driven primarily by growth in the industry, services, and agriculture sectors.
During the presentation of the current National Budget on June 15, President Museveni challenged the Finance ministry to grow Uganda’s economy to $500 billion.
In his presentation, Mr. Kasaija reiterated his commitment to maintaining macroeconomic stability through fiscal consolidation measures, boosting household incomes and microenterprises through the Parish Development Model, and advancing agriculture for increased production and competitiveness.
At the same conference, Prime Minister Robinah Nabbanja echoed the Finance minister’s stance, emphasizing adherence to effective implementation of Uganda’s fiscal consolidation agenda, including domestic revenue mobilisation, efficient public expenditure management, and controlling non-concessional borrowing through the Medium-Term Debt Reduction Strategy.
The overarching goal of the Budget Strategy for FY 2024/2025 is to achieve a minimum of 7 percent economic growth in the medium term. This involves transitioning from reliance on raw material exports to a manufacturing and knowledge-based economy, enhancing the business environment’s competitiveness, and addressing various sectors for growth, including agriculture, oil and gas, mining, tourism, human capital, science, innovation, research, digital transformation, and public sector effectiveness and accountability.