Over half of govt revenue to pay public debt
Government will use over half of its revenue collections to pay back loans in the next two years.
The loans were sourced from domestic and foreign lenders including banks and international financial institutions.
The revelation is contained in the latest report released by the Auditor General John Muwanga. The details on debt sustainability worried the Right Hon. Speaker Rebecca Kadaga.
Muwanga presented the Report for the year ending December 2018 to the Speaker at Parliament on Friday, 4 January 2019.
Ms Keto Nyapendi, the Assistant Auditor General, spoke about the national debt getting on the verge of swallowing revenue collected.
“Fifty per cent of the loans sampled totalling Shs3.9 trillion will expire in 2020. If government is to service the loans as projected in the next financial years, it would require more than 65 per cent of the total revenue collections,” said Ms Nyapendi.
Already, the highest percentage of the current budget for financial year 2018/2019 (about Shs10 trillion) goes to loan servicing, a trend Kadaga said is not sustainable.
“The issue of public debt is worrying; if we are going to require all that money in such a short time, then that is going to be difficult,” said Kadaga.
Nyapendi said the loans that are pushing Uganda to the cliff edge by 2020 have conditionalities that work against the country’s financial interests.
“If we go at the rate at which we are moving, it will not be sustainable; we need to be able to control our debts; we are taking loans whose conditionalities are not good for us,” she said.
Muwanga said that although a total of 1919 audits have been conducted, there is still a challenge with sub counties and government aided schools, asking for enhanced budgets to cater for the same.
“There is a challenge with the sub counties and town council. We have been looking at how best to empower District Public Accounts Committees to undertake those audits,” said Muwanga.
He asked Kadaga to appoint an auditor to audit their finances.
In response, the Speaker promised to assemble an auditor preferably from abroad as most firms already work with the Office of the Auditor General.
The Auditor General raised concerns about budget performance, pointing to a Shs1.6 trillion revenue shortfall.
Pension and gratuity arrears for retired civil servants, he said, stood at Shs65.6b in arrears.
He added that a total of 40 government entities have failed to submit their strategic plans, making their activities misaligned to the National Development Plan.
Muwanga said government has failed to collect up to Shs20b it has won in court awards, which he said is suspicious given the aggressive manner in which those that get awarded against government pursue their claims.
He says government has improved on financial reporting, with agencies with unqualified opinions getting 91 per cent, but said that should not be confused with financial propriety.