By Mulengera Reporters
Uganda’s financial health remains a tale of imbalance, with expenditures far outpacing revenue. The Auditor General’s 2023/2024 report sheds light on the persistent fiscal deficit that threatens the nation’s economic stability.
While domestic revenue has shown consistent growth, from UGX 23.37 trillion in 2021/2022 to UGX 30.89 trillion in 2023/2024, expenditures have ballooned from UGX 44.43 trillion to UGX 46.96 trillion in the same period. This mismatch has left Uganda grappling with a UGX 16.08 trillion fiscal deficit, a glaring gap filled increasingly by external borrowing.
The proverb goes thus cut your coat according to your cloth yet Uganda’s budgetary approach seems to ignore this wisdom. The COVID-19 pandemic exacerbated these financial woes, as revenues dropped during lockdowns while expenditure demands rose sharply. The government’s fiscal consolidation strategy, aimed at increasing domestic revenue and rationalizing expenditures, has shown limited success in curbing the deficit.
The report highlights that heavy reliance on loans to bridge funding gaps poses long-term risks. Uganda’s external debt climbed to UGX 54.36 trillion in 2023/2024, a 2.2% increase from the previous year. Debt from multilateral creditors, which rose to UGX 35.15 trillion, accounts for most of this growth.
Though debt from commercial banks and bilateral creditors showed slight reductions, the overall trend is worrying. The Auditor General advised the government to enforce stricter fiscal policies to reduce dependency on borrowing.
Strengthening domestic revenue mobilization and ensuring better utilization of available funds are critical to reversing this trend. If not addressed, the rising debt burden could choke the nation’s future growth, leaving the next generation to pay for today’s inefficiencies.
Uganda’s fiscal story is a lesson in balance. While ambition drives growth, reckless spending without adequate revenue streams can derail progress. [Borrow wisely, repay quickly] must become the government’s mantra to secure a stable economic future for the nation. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
