UGANDA: Uganda expects international budget support to plunge in the coming fiscal year, its Ministry of Finance said a month after the World Bank froze all funding over the anti-LGBTQ law. (Bloomberg).
According to the circular, that was released on 20 September, the resource envelope is projected at UGX52.7trillion (US$13.9 billion) for FY24/25, with a clear indication that the government of Uganda’s discretionary resource is expected to decline due to an increase of UGX1.5 trillion in debt servicing costs and an increase of UGX0.58 trillion (US$153 million) in external debt repayments. Furthermore, the reduction in budget support is extensive from UGX2.7 trillion to UGX0.03 trillion.
In total, this means that the government’s funding for other areas of the economy is expected to taper to UGX21.7 trillion from UGX25.2 trillion. Tax revenue is only marginally expected to improve, to UGX29.9 trillion from UGX29.6 trillion. We note that fiscal consolidation remains part of the broader strategy to support the GDP growth target of 7.0 percent in FY24/25 while prioritizing spending to critical areas of the economy.