By Editor and Agencies
In FY 2024/25, domestic revenues are projected to amount to Ushs 29,957.9 billion (13.6% of GDP), from an estimate of Ushs 29,672.4 billion, according to the National Budget Framework Paper (NBFP) that was presented by the Finance State Minister in charge of General Duties Henry Musasizi to Parliament on December 13th 2023.
This projection translates into nominal growth in revenues of UShs 285.6 billion. According to the FY 2024/25 NBFP, 93% of domestic revenues will be obtained from tax revenues (UShs 27,784.0 billion) while the remainder will be obtained from Non-Tax Revenue (UShs 2,174.0 billion).
“This rise is attributed to gains on account of higher economic growth and projected revenue gains due to the implementation of the Domestic Revenue Mobilisation Strategy (DRMS). Over the medium term, domestic revenues are projected to grow by 0.5% of GDP in line with the target set out in the Charter for Fiscal Responsibility and the DRMS.”
In addition, a total of UShs 8,905.8 billion is projected as external financing in FY 2024/25. Of this, UShs 28.9 billion will be obtained as budget financing loans and UShs 8,876.9 billion from project loans.
“Government borrowing from the domestic market for fiscal purposes in FY 2024/25 is projected at UShs 4,116.0 billion. In the medium term, the Government’s policy remains committed to maintaining domestic borrowing to no more than 1% of GDP to avoid crowding out of the private sector,” reads part of NBFP.
External debt repayments (amortization) are projected to amount to UShs 3,223.8 billion compared to UShs 2,638.6 billion in FY 2023/24. Over the medium term, external debt payments are projected to increase due to the increase in
commercial loans over the last few years.
Interest Payments
In the FY 2024/25, interest payments are projected to amount to UShs 7,623.4 billion, equivalent to 3.5% of GDP. Out of this, UShs 5,662.9 billion is projected for domestic interest payments while the remaining amount equivalent to UShs 1,960.5 billion will be foreign interest payments and commitment fees. In addition, over the medium term, interest payments are projected to average 3.0% of GDP.
Fiscal Strategy aims at inclusive growth, a stable macroeconomic environment . According to the FY 2024/25 NBFP, the goal of the fiscal strategy is to attain inclusive economic growth while maintaining a stable macroeconomic environment and preserving debt sustainability.
This will be attained through continued investment in public infrastructure for inclusive growth and implementation of the Domestic Revenue Mobilisation Strategy (DRMS) which targets revenue to GDP growth of 0.5% every fiscal year.
By the Charter for Fiscal Responsibility (FY2021/22
– 2025/26), the total debt in nominal terms is to be maintained below 50% of the GDP, while the fiscal balance including grants shall not exceed 3.0 percent of non-oil GDP by FY 2025/26.
“To attain the required fiscal balance, the Government is harnessing revenue mobilisation while ensuring that the rise in recurrent spending matches the efficiency of revenue mobilisation.
Furthermore, the Government is prioritizing spending towards sectors with high investment multipliers and households in the subsistence economy in line with the objective of full monetization of the economy.”