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CSBAG presentation to the Finance committee on the NBFP FY 2015/16

P.O Box 660, NtindaPlot 11 Vubya, Close|Nakawa Ntinda stretcher Road

Tel: 0755202154|web: www.csbag.org

About CSBAG

A coalition of 72 Organizations

Established in 2004 to influence Government decisions on resource

mobilization and utilization for equitable and sustainable

development.

Vision:

To have a Uganda with a People

Centered Budget that dignifies

humanity

Mission:

To work towards ensuring that budgets at local and national levels are financed, designed,

implemented and monitored to promote prudent and

transparent of national resources for the benefit of marginalized

groups.

04/18/2023 Civil Society Budget Advocacy Group 3

Context

Headline inflation- 6.9% in February 2014 to 1.4% in February 2015.

Average exchange rate (UGX per USD) depreciated from 2,523.7 in December 213 to UGX 2,726.99 in December 2014


Context

The value of exports reduced from USD 233.3

million in January 2014 to

USD 229.82 million in

January 2015.

The value of imports

increased from USD 396 million (fob) in January

2014 to USD 415.85 million

(fob) in December 2014.

Central Bank Rate at 11%-12% since June 2014,

while the commercial

banks’ lending rates have

averaged at 21% since June 2014.


Commendable efforts in public finance management


Positive developments in public finance management for improved service delivery

Enacting the Public

Finance Management

Act, 2015

Enhanced Ministry of

Finance partnership with Non-

State Actors



Timely re

lease

and access

to

Budget

information

Single Treasurer

Account



Management of inflation

Review the fiscal decentralization strategy

Collaborative efforts to enhance Tax:GDP ratio


Macro Economic challenges


Prevalent High Interest

rates

• .

Recommendation

Increase regulation in the financial sector, particularly on the commercial

banks not to exceed 7 percentage points above or below the CBR

Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-140.00

5.00

10.00

15.00

20.00

25.00

10.40

10.60

10.80

11.00

11.20

11.40

11.60

11.80

12.00

12.20

Central Bank Rate (CBR) 4/ Deposit Rates (WARD) Lending Rates

18.38% difference btn lending and saving rates


Figure 3: Trends between NPL to Lending rates

0.00

5.00

10.00

15.00

20.00

25.00

30.00

2.47 1.61 1.81 2.21

3.40 3.92 4.65 4.23 4.66 3.97 4.36 5.97 6.17 5.80 5.26

4.13

20 2022

2527 27 26

24 24 24 23 2222 22 21 22

NPLs to total gross loans Lending Rates

Source: CSBAG calculations and computations


Exchange rate depreciation

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15 -

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

Period Average Rate Linear (Period Average Rate )

The Government should enhance exports through funding to the value addition initiatives.

Shift away from full liberalization of the currency market in next FY 2015/16.

Enforce that transactions carried

out locally are in Uganda shillings.


Supplementary Budgeting

F Y 2 0 0 8 / 0 9 F Y 2 0 0 9 / 1 0 F Y 2 0 1 0 / 1 1 F Y 2 0 1 1 / 1 2 F Y 2 0 1 2 / 1 3 F Y 2 0 1 3 / 1 4 F Y 2 0 1 4 / 1 5

254,

221,

096,

000

332,

477,

675,

000

1,98

2,03

8,51

9,00

0

638,

455,

051,

000

552,

033,

911,

000

479,

929,

569,

000 91

0,86

9,81

1,88

0

MoFPED should ensure critical

sector functions are budget for as

a matter of priority.

Government should expedite

full implementation

of the Public Finance and

Management Act, 2015.


Tax to GDP ratio: EAC Monetary UNION -25%

country T/GDP RatioUganda 11.70%Kenya 19.30%Tanzania 12.60%

MoFPED should in partnership with the URA, develop its capacity to forecast revenues for individual tax heads using information on the

macroeconomic and administrative factors affecting

collection.


Taxation is the price we pay for civilization…

To collect more revenue, imposition of an environmental tax on the firms and companies that have a carbon foot print on the environment is very critical. We envision that government will collect UGX

100bn.

Government should pain stakingly re – introduce the Graduated Tax (GT).

Government should revisit the double taxation stance with a view of taxing multilateral companies whose subsidiary companies operate locally. We envision that this will bring in UGX 100 billion per year.


Taxation is the price we pay for civilization…Re-introduction of road tolls on the new infrastructure transport projects. We envision that this measure will yield about UGX 150bn per year.

Taxing cash withdrawals. We propose that a 1% tax for any cash withdrawal above UGX 5 million.

Property tax. This measure can generate not less than UGX 50bn per year.

Special taxes for infrastructure projects. This is what revolution is all about!!!

Tax on unprocessed exports. This will not only create employment but also promote value addition and subsequent taxes paid at various levels in the different value chains.


Winners and losers

(1,0

13.9

0)

(466

.50)

(317

.40) (5

6.70

)

(45.

30)

(42.

10)

(30.

20)

(22.

00)

0.2

0

1.0

0

1.2

0

3.9

0

13.

40

34.

43

74.

70

122

.30

155

.30

286

.74 6

78.4

0

Chan

ge in

Allo

catio

n (B

illio

ns)


Specific Budgetary concerns


Wasteful Expenditure Amount wasted (Ugsh)

Amount Wasted (USD)

Ministry of Works And Transport 726,882,420

Uganda National Roads Authority 2,464,934,174 3,663,761

Ministry of Health 2,143,173,980

Uganda Aids Commission 12,766,000

Uganda Cancer institute 448,408,158

China-Uganda Friendship Hospital, Naguru

8,054,900

Ministry of Water and Environment 1,120,908,971

Uganda Embassy,ABU DHABI 2,048,822

Ministry of Local Govermnet 404,788,822

Mbale Regional Referral Hospital 146,883,559

Total 7,478,849,806 3,663,761

According to the Auditor General’s report FY 2013/14, UGX 7.4bn and USD 3.6mn was considered wasteful


Poor reporting on NTR• We note with concern that the

component of NTR outturn is not reported on every year. • From the BFP it is evident that in

FY 2013/14 every sector has zero outturn recorded and yet ministries and agencies of government collect NTR .• This omission creates are false

impression on the figures that are presented.

• Gov’t should ensure that every sector records NTR outturn so that citizens can appreciate the contribution of funds collected under the category to fund the sector.• Gov’t should initiate reforms

aimed at enhancing NTR as well revising rates applicable to make more relevant to the current economic situation.


Poor Absorption Capacity

In the FY 2013/14, Government entities returned unspent balances of UGX.9,412,704,745 to the consolidated Fund

Projects failed to absorb funds totaling to UGX.217,393,823,773 indicating partial service delivery.

• Government should refine the procurement system better to improve the absorption of the development budget.• Punitive action should be taken

against the institutions that do not absorb their development budgets by the end of the FY.


Late release of funds to spending agencies

Quarter 1 FY 2014/15• A total of 11 districts and 24 sub-

counties were sampled during the study covering 37 UPE schools and 11 Health Centers visited.

• Findings• Out of the 14 schools verified to exist, 9 had

discrepancies in the enrollment. • Only 25% of the service delivery points

sampled received funds from the consolidated fund by 24th July 2014

• 50% of the spending agencies received funds by 4th August 2014

Quarter 2 FY 2014/15• A total of 12 districts and 32 sub-

counties were sampled during the study with 22 schools and 28 Health Centers visited. • Findings• There was a 36% shortage of staff in the

Health Centres • 10% staffing gap in the schools that were

monitored.• 25% of the institution monitored had not

received funds for Q2 FY 2014/15 by 1/12/2014


Unfulfilled promises for the FY 2014/15

In the FY 2014/15 Budget Speech two major proposals were made and have never been fulfilled;

• The establishment of the cooperative bank, which has now become an unfunded priority under the Trade sector, requires Ugshs 35bn for its revival.

• The establishment of the salary review commission which has never taken off and it’s not even mentioned anywhere in the budget framework paper.


Other observations and recommendations

MoFPED should provide guidelines for the implementation of the PFMA for CSO input

we need a definite deadline when all the documents needed under the PFMA for Parliament to be able to approval the budget will be tabled Section 13(9-10) and Section 10

We understand rush meeting the PFMA deadlines but level of compliance is so low.


Other observations and recommendations

MOFPED inability to provide project budget codes and

counterpart funds yet they are in charge on signing loans and grants

Action on not appointing

Accounting officer based on the PFMA

recommendation Section 11 sub

section 2 (g)


Conclusion

The strategic goal of the 2015/16 Budget

is Promotion of Excellence in Public Service Provision.

In order to achieve this strategy, the

issues and concerns that have been

highlighted above by the citizens should be given the much

needed attention by both the executive

and the legislature.

We seek a people centered national

budget that dignifies humanity, because

Every Shilling Counts.

untitled

Documents

public finance management

uganda embassy

nbfp fy

sector records ntr outturn

component of ntr outturn

finance committee

uganda cancer institute

uganda aids commission12