Henry Musasizi, the Minister of State for Finance (General Duties) has revealed that the government of Uganda intends to generate Shs1.902 trillion from the recently proposed taxes on cement, fuel, land transactions, mineral water, among others, in order to finance the Shs58.340 trillion budget for FY 2024/25.
Musasizi made the remarks on Wednesday while appearing before Parliament’s Budget Committee where he had been summoned to defend the proposed 2024/25 national budget.
“Following the consultations with stakeholders, we agreed that the budget for 2024/25 required implementing the above priorities amounts to Shs58.340 trillion from Shs52.722 trillion of the National Budget Framework Paper on account of additional Shs1.902 trillion which we expect through new tax policy and administrative measures,” said Minister Musasizi.
He also revealed that due to the skyrocketing interest rates within the global credit market, Uganda has backed off plans to borrow $414 million (Shs1.605 trillion) from the external lenders, in order to cover the gap that has been created by revenue collection shortfalls, as such borrowing would exert pressure on Uganda’s public debt sustainability.
“The approved budget for 2023/24 projected external borrowing of $414 million (Shs1.605 trillion) from external sources to cover the revenue gap, however, this hasn’t materialized, because interest rates are currently very high globally. We shall live within the available resources of FY2023/24,” he said.
“For example, the interest rate on dollar loans is about 10% per year and for Euro loans, they are between 8-9% annually. These aren’t affordable and would pose a significant risk for the debt sustainability. We will not therefore borrow externally on commercial terms for general budget financing until the global interest rates reduce to affordable levels. To finance the gap arising from the decision not to borrow the $414 million,” said Musasizi.
