Reviewing Uganda’s 2021/22 budget

Ugandan legislators have recently approved a $12.6 billion budget for the 2021-22 financial year, marking a decrease of approximately $202.3 million compared to the previous year. This budget is equivalent to about 45 trillion Ugandan shillings, focusing on key sectors such as security, infrastructure, and social services. The government plans to implement a parish model to allocate resources at the lowest government level to address the impacts of the ongoing COVID-19 pandemic. The budget will allocate around 40% of the funds for spending, while the rest will go towards debt repayment, debt resizing, and capital investment. Despite domestic financing constituting 76.7% of the budget, uncertainties loom due to the unpredictable nature of the pandemic and its impact on the informal economy. The recent surge in COVID-19 cases in Uganda could potentially lead to another lockdown, affecting economic activities. Debt sustainability remains a concern as domestic revenue collection is likely to decline, causing governments to seek external funding sources. Uganda, like other African economies, is looking towards multilateral institutions such as the IMF and World Bank to borrow funds to address the widening fiscal deficit. The debt-to-GDP ratio is expected to rise to approximately 52% by the end of the financial year, driven by investments in infrastructure projects and the energy sector. Security expenditure has been a significant priority in Uganda, with rising tensions in the region and recent deployments in neighboring countries. The unstable regional environment and the aftermath of a contentious election have necessitated increased investment in security measures. Moreover, the ongoing pandemic requires additional resources for security personnel and organizational needs. Despite economic growth and prosperity, Uganda's budget reflects the government's focus on addressing immediate challenges such as security threats and the impact of COVID-19. The country's budget priorities aim to navigate through the uncertainties posed by the pandemic while sustaining economic growth and development in key sectors.