COMMENT: Budgeting for a sustainable future

Implementation is another concern. The energy and transport sectors – which represent 35% of the proposed Budget – traditionally records Uganda’s lowest budget execution rates, and value for money is an issue. Even if Uganda decides to go ahead with the proposed frontloading of infrastructure, including through loans mortgaged by future oil revenues, adequate sequencing in procurement and quality execution are critical to address absorption challenges. Interest payments on external loans are already taking a large share of the budget, making up the third largest share.

Cutting services supposed to benefit future generations, with future oil revenues as guarantees for loans, in order to pay interests on delayed infrastructure execution -in our view will make Uganda’s quest to reach the Sustainable Development Goals all the more difficult. We wonder whether there is an implicit expectation that donors and International Non-governmental Organisations (INGOs) will fill the gaps.

The draft 2017/18 budget also implies increased domestic public borrowing. In 2016, Government of Uganda already became the largest borrower from the domestic market and this is now set to rise further. This means putting more scarce capital into the public administration, which accounts for less than 3% of the Uganda’s labour force, with the private sector finding it harder to access credit.

To help the private sector create jobs to the future tax payers, we believe the government should consider reducing domestic borrowing, and avoid adding further to the current Shs2.3 trillion of arrears. Only then will Uganda eventually see cheaper private sector access to capital for productive private investments, which are paramount to future growth.

In short, while we understand the difficult need to prioritise, we pledge to support the Government of Uganda to invest in both people and infrastructure, to unleash modern, sustainable, and equitable economic growth.

This in our view calls for a balance between productive and social sectors, between future oil production and job creation and skills now for the youth.

Finally, as we look to a future where trade and investments gradually replace aid and loans, we will continue to offer Uganda full zero tariff-access to the European Union, the second largest market in the world.

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The authors: Hugo Verbist, Ambassador of Belgium, Mogens Pedersen, Ambassador of Denmark, Stephanie Rivoal, Ambassador of France, Peter Blomeyer, Ambassador of Germany, Dónal Cronin, Ambassador of Ireland, Domenico Fornara, Ambassador of Italy, Henk Jan Bakker, Ambassador of the Netherlands, Per Lindgärde, Ambassador of Sweden, Peter West, British High Commissioner, Günter  Engelits, Head of Office, Austrian Development Cooperation, Kristian Schmidt, Ambassador, Head of Delegation of the European Union