Government Releases Shs 5.8 Trillion For First Quarter’s Spending

The Ministry of Finance, on Tuesday, released Shs 5.899.54 trillion equivalent to (21.3%” of the total approved budget for the fiscal year 2024/25, to all government Ministries, Departments, and Agencies (MDAs) to commence their operations.

While releasing the funds at the Ministry, the Permanent Secretary of Finance and Secretary to Treasury Ramathan Ggoobi, banned new recruitment of civil servants without clearance from the Ministry of Public Service to prevent the “creation of new arrears”, for the government.

To ensure timely execution of government projects and services, Ggoobi directed all accounting officers to ensure all government employees are paid by the 28th of every month and display payroll on noticeboards.

In this financial year, Ggoobi said that priority was given to payment of service providers on time to avoid accumulation of arrears and penalties. He also that the government has emphasized fiscal discipline, budget credibility, commitment to service delivery, and timely project execution as key priorities for this financial year.

A detailed breakdown of the first quarter expenditures across all government MDAs was released outlining the allocation of funds to various sectors and projects, and below, we are reproducing a slightly abridged version of the Press release by the PS who asserted that this transparency is aimed at promoting accountability and ensuring effective utilization of resources;

Press release on first quarter expenditure releases for FY 2024/25

I wish to welcome the media and other stakeholders to this press briefing whose objective is to: a) Communicate to the Country the release of funds to Government institutions for the First Quarter (Q1) of FY 2024/25, and b) guide Accounting Officers on the execution of the Budget.

Let me start by summarizing the State of the Economy.

State of the economy;

Economic Growth

Uganda’s economy has fully recovered from the various shocks, crises, and false alarms. You recall that when Covid-19 happened, leaders were told it would be worse than the financial crisis of 2008 and potentially as bad as the Great Depression of the 1930s. Instead, a fast and strong recovery has unfolded.

GDP grew by 6 percent last financial year 2023/24 up from an average of 4.1 percent in the period between FY 2019 /20 and FY2022/23. Remember that GDP growth had previously reduced to 3.0%.

This impressive growth was on account of higher growth in all sectors. The services sector grew by 6.6%, up from 5.9%; while the industry sectors increased by 5.8%1, up from 4.0%. The agriculture, forestry, and fishing sectors, saw growth of 5.1 %, compared to 4.5% previously.

This is in line with recent trends in the high-frequency indicators of economic activity. In FY 2023/24, the Purchasing Manager’s Index (PMI) averaged 52.7, remaining above the 50-mark threshold and indicating an improvement in business conditions. The Business Tendency Index (BTI) also remained above the SO-mark threshold throughout the financial year indicating optimism from investors about doing business in the Ugandan economy.

Economic growth in FY2024/25 is projected between G and G.5 percent, rising above 7 percent in the subsequent years driven by our Tenfold Growth Strategy. This strategy is hinged on increased investment and growth in agro-industry; tourism development; mineral development including oil and gas activities; and science, technology, and innovation (STI) including ICT.

Inflation and Exchange Rate

At 3.9 percent in June 2024, inflation has been contained within the target thanks to the strong coordination of monetary and fiscal policies. Uganda has sustained good food supply chains leading to low food crop inflation.

The government has also implemented a proactive industrial policy that has helped to add value to agricultural and mineral commodities, replace some of the hitherto imported manufactured products, and boost export earnings. Manufactured products are increasingly becoming a significant contributor to Uganda’s export earnings.

In 2023, for example, Uganda exported cement worth USD 91.1 million, sugar worth USD 75.8 million, plastics worth USD 62.6 million, soap worth USD 33. 9 million, and beer worth USD 25.8 million. The increased inflow of

-foreign exchange has led- to a relatively stable shilling. In the last quarter, the exchange rate has reduced to an average of Shs 3,787 per US dollar last month from an average of Shs 3,857 in March 2024.

These deliberate efforts by the government have complimented the Bank of Uganda’s tight monetary policy actions and improved global economic conditions to arrest inflation.

Interest Rates

The commercial bank lending interest rates for shilling-denominated loans have reduced to 17.7 percent in April 2024 compared to 19.3 percent in April 2023. Interest rates in the domestic debt market have remained broadly stable averaging 11.2 percent on the one-year Government Treasury Bills.

The government is continuing with the provision of several funds to support micro-enterprises, SMEs, farmers, and large businesses to access investment capital that is patient and low-cost.

Approved budget for FY 2024/25

The approved Budget for FY 2024/25 amounts to Shs 72.137

Trillion as summarized below:

I Category Amount (Shs Billion)
 

1

.1.1..

 _Wc1.ge

Non-Wage

 7,934.75

13,633.00
111. GoU Development 5,902.33
lV. External Financing – Devt 9,583.46
V. Debt and Treasury Operations 34,589.16
Vl.           , Arrears 199.90
vu. Local Revenue

I

 293.9-0
Total Budget 72,136.50

 

The GoU discretionary Budget (excluding debt and treasury operations, external financing, and Local Revenue) is Shs 27.670 trillion.

Highlights     of expenditure limits      for the first quarter of FY 2024/25

The Ql Expenditure Limits for FY 2024/25 were derived from the Work Plans and Procurement Plans of Ministries, Departments and Agencies and taking into consideration the available resources for Ql of FY 2024/25.

For this Quarter (July – September 2024), Shs 5.899 trillion, has been released representing 21.3% of the discretionary budget as follows:

Category Released (Shs billion)
Wage 1,990.28
Non-Wage ,171,q1
GoU Development 337.53
Arrears 199.83
Total 5,899.54

 

The key highlights of the release per category are as follows:

Wages and Salaries

  1. Shs 1. 990   trillion  to cater              for wages          and       salaries                across Government;

 

Non-Wage Vs. Wage Recurrent

  1. Shs 323.50 billion for Pension and Gratuity;
  2. Shs 308.75 billion to Local Governments including Education Capitation Grants (Shs. 112.28 billion) to cater for the Third Term of the school year;

1v. Shs 95.26 billion to all Public Universities, Uganda Management Institute, and Law Development Centre in line with the semester requirements;

Shs 43. 77 billion for examination bodies i.e. Uganda National Examination Board (UNEB) and Uganda Business and Technical Examinations Board (UBTEB);

v1.  All Missions Abroad – Shs 100.58 billion (representing 50% of the  Annual  Budget) to hedge  them  against  loss  of Poundage;

v11. National Council of Sports – Shs 124.63 billion including payment of AFCON commitment fees, equivalent to USD 30 million;

v111.  Health institutions’ operational funds have been released for:

Referral Hospitals – Shs 22.58 billion;

Uganda Cancer Institute – Shs 12.31 billion;

Uganda Heart Institute – Shs 7.06 billion;

Uganda Blood Transfusion Services (UBTS) – Shs 4.1 billion;

Subventions under MoH- Shs 21.85 billion for medical interns’ salaries;

In addition, Shs 173.68 billion has been released to National Medical Stores (NMS) for the purchase of essential drugs and medicines.

1x. Operational funds for Security institutions:

Ministry           of           Defense             and       Veteran             Affairs –           Shs       253.30 billion;

Uganda Police Force – Shs 56.43 billion;

Uganda Prisons Services – Shs 44. 79 billion;

ISO – Shs 28.08 billion; and,

ESO – Shs 19.44 billion.

 

  1. Parliament – Shs 153.60 billion;

x1.  Judiciary- Shs 47.40 billion;

  1. Auditor General – Shs 10.11 billion;

x111.  Science Technology and Innovation – Shs 124.63 billion;

xiv. Uganda National Oil Company (UNOC) – Shs 124 billion for Equity acquisition in the East African Crude Oil pipeline (EACOP).

Domestic         arrears               amounting      to           Shs       199.83              billion              and       the International Court of Justice (ICJ) award to DRC of Shs 247 billion.

GoU Development Budget

Development funds have been provided to cater for the following;

  1. Contract staff salaries – Shs 21.76 billion;
  2. URA – Shs 14.34 billion;
  3. KCCA – Shs 22.67 billion;

1v.                         MoFPED                           —            Shs       14.53 billion                              to                           cater    for                                the Resource Enhancement                and                       Accountability             Programme                   (REAP)              and Uganda     Inter-governmental Fiscal                                  Transfers                         Programme (UGIFf);

  1. Local Government grants – Shs 229.27 billion, representing one

third of the development grant allocations; and,

 

v1.          All Missions abroad – Shs 29.4 billion.

 Conclusion

In conclusion, I would like to highlight the following:

  1. The Q1 release is in line with our continued effort of fiscal consolidation through coordinated fiscal and monetary policy;
  2. All Accounting Officers must ensure that they pay salaries, pensions, and gratuities by the 28th of every month;
  3. There should be a display of the payrolls for salaries and monthly pensions on Government institutions’ notice boards every month;

1v. Accounting Officers must prioritize payment of service providers on time and clearance of domestic arrears to avoid further accumulation of arrears and penalties. I wish to emphasize this – there should be no creation of arrears;

  1. NO recruitment should be done without clearance from the Ministry of Public Service after ascertaining the availability of adequate wages from this Ministry;

v1.  Accounting Officers are required to ensure that every promotion and re-deployment of staff made to a different cost center should be backed up by adequate wage provision; and

v11. All Government operations this financial year will underpin fiscal discipline, budget credibility, commitment to service delivery, and timely project execution.

Once again, I wish to thank the Press and Civil Society for supporting our budget transparency initiative.

Ramathan Ggoobi,

Permanent Secretary/Secretary to Treasury (PSST)

© Copyright 2024 File Facts All Rights Reserved.
Back to top button