The high cost of living, a widening budget deficit, corruption and growth uncertainties continue to tarnish Ugandan President Yoweri Museveni’s sixth term in office.
The president, who is expected to address the nation this weekend after the end of the first year of his current term, has faced calls from businesses and the public to rein in the escalating cost of raw materials, especially fuel, the retail price of which has increased by more than 70%. Last year.
The last time President Museveni addressed the nation about rising prices was on Labor Day, when he advised Ugandans to choose between buying bread and cassava.
Finance Minister Matia Kasaija told the nation to prepare for the worst, saying the government could not intervene and/or cut taxes.
Household budgets and operating costs in Uganda have risen sharply in the face of the government’s stance not to provide fuel tax rebates, adding uncertainty to the economic recovery.
Although the Bank of Uganda says the economy is recovering from the pandemic downturn, domestic growth weakened in March 2022 due to rising food and fuel prices.
Juliet Najjinda, tax services manager at PricewaterhouseCoopers Uganda, said it was time for the government to introduce a fuel subsidy to reduce prices at the pump as the manufacturing sector is feeling the heat.
“It is no longer viable to leave the price of fuel to market forces,” Ms Najjinda said, adding that the government levies between Ush 1,200 ($0.33) and Ush 1,300 ($0.36) per liter of fuel.
Opposition MPs Cecilia Ogwal, Muwanga Kivumbi and Anthony Akol said that until the government comes up with specific funding, the far north – Busoga, Bukedi, Teso, Karamoja, Acholi, Lango and West Nile – will continue to to suffer.
“The outlook for the country seems to indicate that there are two countries in one; the Great North and the Great South,” said Mr. Kivumbi, the shadow minister of finance and economic planning. “If left untreated, he poses a threat to the security and posterity of the country.”
Willis Bashasha, director of manifesto implementation in the president’s office, said they face challenges in implementing their policies.
“Corruption is our greatest enemy. This affects the implementation of projects,” he said.
Although the government has put in place institutions to fight corruption, much more needs to be done. A survey by the Government Inspectorate found that the country loses Ush 20 trillion ($5.5 billion) annually to corruption in key government agencies, and Ush 590 billion (161. $7 million) in fraudulent supply agreements.
The report helped Parliament challenge multimillion-dollar contracts the government has entered into with a single source. Members called on the government to cancel the deal giving Uganda Vinci Coffee Company Ltd exclusive rights to buy all Ugandan coffee. In 2019, the same company was contracted to manage the construction of the stalled Lubowa Specialty Hospital without going through a tender process. The government issued a promissory note for $397 million.
In the 2021/2022 budget, the hospital received Ush 348 billion ($95.4 million) and in the 2022/2023 budget proposals submitted to the finance committee, an additional Ush 319 billion ($87.4 million). dollars) are allocated to the project.
Political finance watchdog, Alliance for Financial Monitoring, says sole sourcing appears to be synonymous with costly sourcing deals.
“This makes it by far the most expensive hospital to build in Uganda, compared to Kiruddu, which cost Uganda $25 million. The Lubowa hospital project is about 16 times more expensive,” said lobbyist Henry Muguzi. “The lack of transparency around this market exposes the process to abuse. This is what unravels in the case of the Lubowa hospital, which subjects him to financial crime.
The increase in administrative units also puts pressure on the national budget. From 14 districts in the country in the 1960s, there are now 146 districts.
“A lot of resources have to be used to respond to new units, which affects service delivery as resources are overstretched,” Bashasha said.
Uganda faces an ongoing fiscal deficit problem, given low domestic revenue.
“Over the past decade, Uganda’s tax-to-GDP ratio has increased by more than three percentage points to around 12%. It stagnated at this level in the years before the Covid-19 pandemic. Although during the pandemic incomes have declined, the tax-to-GDP ratio has held up well,” said Izabella Karpowicz, Resident Representative of the International Monetary Fund in Uganda.
Ms. Karpowicz said Uganda needed to increase domestic revenue collection by 0.5% of GDP per year.
She said further income stagnation could push Uganda to borrow more or contain spending, including on priority spending. This would further delay the implementation of the Sustainable Development Goals.
President Museveni’s year bore good fruits, such as the restoration of relations with Rwanda, culminating in the opening of the border at Katuna. Rwandan President Paul Kagame traveled to Uganda to attend General Muhoozi Kainerugaba’s 48th birthday party last month. It was the first visit in four years.
Uganda’s deployment and collaboration with the forces of the Democratic Republic of the Congo to root out the Islamist rebels of the Allied Democratic Forces – who have destabilized the region, killing thousands of people over the past two decades – is also an act positive. The government has also started construction of roads in the DRC as part of efforts to provide security, promote trade and access new markets in this vast, mineral-rich country.
During the year, President Museveni also hosted Mozambican President Felipe Nyusi and the two countries pledged to strengthen their cooperation in the areas of defense and security, immigration, agriculture, energy, oil and mining development.