Uganda Faces Shs4.4 Trillion Budget Deficit as Public Debt Soars, Warns PAC

The Public Accounts Committee (Central Government) has expressed concerns over Uganda’s financial management, highlighting a Shs4.4 trillion gap between the government’s expenditure and revenue.

In a report presented to Parliament on Wednesday, 16 October 2024, the Committee Chairperson, Hon. Muwanga Kivumbi, pointed out that this significant deficit, coupled with growing domestic arrears, poses a serious threat to Uganda’s economic stability.

The report revealed that for the financial year ending 30 June 2023, the government had set a revenue target of Shs48 trillion. However, actual expenditure surged to Shs52.5 trillion, resulting in a Shs4.4 trillion shortfall.
“This ongoing failure to align revenue with expenditure is unsustainable and harms Uganda’s financial credibility,” Kivumbi said in his address to Parliament.

Kivumbi criticized the lack of fiscal discipline, remarking, “We cannot keep approving budgets that paint an overly optimistic picture when the reality is much different. This kind of deceptive budgeting is damaging our ability to finance essential services.”

A key issue in the report is the accumulation of domestic arrears, which increased from Shs8 trillion in 2022 to more than Shs10 trillion in 2023. Kivumbi warned that this rising debt could lead to legal risks and hinder the government’s ability to meet its financial obligations.
“We must not allow this unchecked accumulation of debt,” he urged, calling for accountability from officials who commit to spending beyond the approved budgets.

Kivumbi also noted that issuing warrants without ensuring the availability of cash misleads accounting officers, causing them to commit to payments the government cannot meet, which contributes to the rise in arrears and overall financial mismanagement.

The report further addressed broader concerns about Uganda’s debt management. As of June 2023, the country’s public debt had risen to Shs97 trillion, up from Shs86 trillion in 2022.
Domestic debt accounted for Shs44 trillion, while external debt stood at Shs52 trillion.
“The committee observed that the primary driver of this debt increase is new borrowing for budget support, which has strained the economy and led to more domestic borrowing. This situation may not be sustainable in the short term,” Kivumbi said.

The committee also raised concerns about the government’s use of bond switches, cautioning that while these offer short-term relief, they pose long-term financial risks.
“The government is rolling over bonds instead of paying them off, which is costing Ugandans. Had we settled these debts, the country could have saved Shs180 billion,” Kivumbi noted.

He also referenced the stalled International Specialised Hospital of Uganda (ISHU) project in Lubowa, where US$133.5 million in promissory notes had been paid out despite only 23% of the project being completed. Kivumbi condemned this as a “ghost project” and a waste of public funds.
“The committee recommends halting the Lubowa project until Parliament receives and reviews the special audit report by the Auditor General,” he stated.

Following the report’s presentation, Speaker Anita Among postponed further debate, requesting a response from the Executive.
“Since this is a technical report, we need figures. When you present figures, you must have a corresponding response. My suggestion is that we ask the government to provide a detailed reply,” Among said.

Ministers Musa Ecweru, David Bahati, and Denis Hamison Obua were present during the report’s submission.
The Government Chief Whip, Hon. Hamson Obua, requested 21 working days for the Ministry of Finance to prepare a comprehensive response to the issues raised. However, the Speaker directed that the response be presented by 24 October 2024, before the House begins its consideration of the budget framework paper.