Uganda Auditor General raises questions over debt & budget absorption

Uganda, a country in East Africa, is facing mounting concerns over its national debt and budget absorption, with the Auditor General's latest report revealing alarming figures. The report indicates that Uganda's public debt has soared to 96 trillion Uganda Shillings, surpassing the country's debt to GDP ratio. In light of these developments, CNBC Africa caught up with Wilson Manishimwe, a Policy Analyst at Corporate Image Limited, to delve deeper into the implications of these findings. ## Rising Debt Levels and Budget Shortfalls Wilson Manishimwe shed light on the contentious issue of budget absorption in Uganda, citing disparities between the projected and revised budgets. He highlighted a significant gap of approximately 3.3 trillion Ugandan shillings due to supplementary budget allocations. Manishimwe emphasized that these supplementary budgets, meant to cater to unforeseeable and unabsorbable expenses, often distort the budget process. The addition of over 5 trillion shillings through supplementary budgets inflated the initial budget of 52 trillion to 57 trillion, exacerbating budgetary challenges. ## Impact of Funding Freezes and Revenue Shortfalls As Uganda grapples with financing deficits, compounded by reduced donor funding and a low tax-to-GDP ratio of 13 percent, borrowing becomes a critical avenue for revenue generation. Manishimwe raised concerns about the sustainability of Uganda's fiscal practices, urging the government to align its expenditures with revenue generation capabilities. He proposed cost-cutting measures in public administration, including rationalizing government agencies and reducing unnecessary expenditures on a bloated parliamentary and ministerial system. ## Diversifying Revenue Streams and Economic Development In response to the need for sustainable revenue streams, Manishimwe advocated for tapping into untapped sectors of the economy to bolster revenue generation. He highlighted the government's investments in oil and gas production as a potential revenue driver, with the anticipation of revenue inflows by 2025 when oil production commences. By diversifying the economy and leveraging its natural resources, Uganda could potentially mitigate its reliance on borrowing and donor support. In conclusion, as Uganda grapples with escalating debt levels and budgetary challenges, addressing the issues of budget absorption, fiscal discipline, and revenue diversification will be critical to ensuring long-term economic stability and growth.