EAC countries present huge FY 2015/16 budgets

Uganda's Finance Minister Matia Kasaija

Uganda’s Finance Minister Matia Kasaija holding budget documents

 

Four of the five Member states of the East African Community bloc have today (Thursday) presented their 2015/ 2016 financial year budgets to their respective Parliaments.

Uganda and Kenya presented the largest ever budgets to be presented to their parliaments in recent years.Uganda’s budget of twenty four trillion shillings is the largest to be drawn by the current government since it came into power 29 years ago.

Kenya’s budget 2015/16 budget has increased by seventeen percent to reach the mark of over twenty billion dollars or two trillion Kenyan shillings according the country’s National Treasury Secretary, Henry Rotich.  

Tanzania on the other hand slashed its budget by over twenty percent compared to the allocations of 2014/2015 financial year.

 Tanzania

Tanzania’s Finance Minister Saada Mkuya Thursday unveiled Tsh22.4trillion government budget for the FY 2015/16 which focuses funding for general elections, and improving the agricultural sector among other priority areas.

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Tanzania’s Finance Minister Saada Mkuya with the Budget

 

The minister conceded to lawmakers the country has been struggling in revenue collection in previous FY.

“We’re putting in place various interventions to improve revenue collection,” she told the National Assembly Thursday in Dodoma.

Tanzania budget comes at a time when the national debt has augmented to US$19.5billion up from US$18billion last financial year.

The government attributed the spike to rapid demand of concessional loans for infrastructure development and other social and economic projects.

Unlike in previous fiscal years where the government taxed cigarettes and alcohol highly to generate the much needed revenues, this FY the government is doubling taxes on other consumer products as well.

The new taxable areas include fuel and sugar. The new budget will see petrol and diesel levy increased by 50 percent from Tsh50 per liter to 100 per liter and Tsh150 for kerosene.

On imported industrial sugar, the government will now charge US$460 up from US$200 per tonne of imported sugar partly to protect local industries from imported sugar that finds its way into local market for domestic purpose.

While Uganda proposed to borrow internally to finance the bulk of what has been dubbed election year budget, Kenya says it intends to borrow internationally in order to bridge its 700 billion Kenyan shilling budget gap.

Kenya which has faced attacks by Al-Shabab terrorist plans to spend more on security this time around. Other priority areas for Kenya include tourism, road construction, and the standard gauge railway and irrigation infrastructure among others. It also plans to spend to boost education sector with free laptop computers.

Just like Uganda, Kenya also wants to increase its capitation grants to mainly secondary education.   Kenya’s economic  growth has been forecast to decline  from 6.9 per cent to 6.5 percent in the coming financial year while  Uganda’s economy is expect to  grow by 5.8 percent in the coming financial year compared to the 5.3 percent in 2014/2015.

Uganda has a budget deficit of seven percent of Gross Domestic Product compared to 4.5 percent in 2014/2015. Rwanda’s total budget for fiscal year 2015/16 is projected at $2.47 billion compared with of $2.46 billion the 2014/15.

Uganda

 The country’s Minister of Finance Matia Kasaija in his maiden budget speech since taking over office early this year presented to the public a 24 trillion Shillings tax heavy Budget for the financial year 2015/2016.

This is up from the 2014/2015 financial year budget of 15trillion Shillings. The budget presented was however approved by Parliament on 30th May 2015 following the new guidelines of the Budget process.

In the budget, government is seeking to tax the informal sector that has for many years minimally contributed to revenue despite forming 49% of GDP. In this regard, it will start to immediately use the withholding tax system through designate agencies to collect taxes from the informal business.

In transport sector, there will be a mandatory payment of tax for all Public Service Vehicles and Good Motor- Vehicles at time of renewal of annual license.

There will be an environmental levy on used motor-vehicles from 20 percent to 35 percent for motor vehicles of 5-10 years old and to 50 percent for those above 10 years. Passport fees have been increased by 30,000 Shillings to 150,000 Shillings and a special passport fees at 300,000 Shillings has been introduced for any person who wishes to get a passport expressly within 24 hours.

Also excise duty of 10 percent has been introduced on confectioneries and furniture and 5 percent on motor vehicle lubricants. Excise duty rates on some items such as fuel, beer, cigarettes and wine and ready to drink spirits have also been imposed.

The VAT threshold has been revised to 150 million Shillings. The VAT threshold had been maintained at 50 million Shillings since the inception of VAT in 1997.

Finance Minister Matia Kasaija explained that this threshold has been overtaken by events such as the growth in the economy, exchange rate depreciation and inflation.

The threshold for persons that use a cash basis accounting system has also been increased from 200 million Shillings to 500 million Shillings in recognition that businesses with a turnover of less than 500 million Shillings transact mostly in cash.

Government has also increased the threshold for the presumptive regime from a gross turnover of 50 million to 150 million Shillings.

This is directed at reducing the cost of compliance among small businesses and increase certainty of tax. Minister Matia Kasaija highlighted that the Uganda Revenue Authority will have to collect 11.333 billion Shillings up from 9.799 billion Shillings to run the government in the new financial year.

This he said is to be achieved through a number of changes to the structure and coverage of taxes, and efficiency improvements in tax collection and compliance.

Out of the presented Shillings 23.972trillion budget, Shillings 17.329 billion is allocated for spending by Ministries, Departments and Agencies (MDA’s), which includes statutory expenditures amounting to Shillings  1.148 billion. 6.643 billion Shillings is debt repayments plus interest on total debt.

The total debt repayment includes Shillings 4.787 billion which is meant to pay maturing domestic debt, 200 billion Shillings for recapitalization of the Bank of Uganda, Shillings 1.370.5 billion and Shillings 285.7 billion for domestic and external debt interest payments respectively.

Just like in the last two financial years where government focused on infrastructural development and the energy sector, the Works and Transport sector has taken the biggest chunk of the budget of Shillings 3.328trillion, followed by the Energy with Shillings 2.826 trillion, and Security with  Shillings1.632trillion.

Social sectors: Health has been allocated 1.270 trillion Shillings, Education with Shillings 2.029trillion and provision of water and protection of the environment took 547.31 billion Justice, Law and Order sector Shillings 1.051 trillion, Accountability Institutions Shillings 1.005trillion.

Others include Agriculture sector with 479.96 billion Shillings allocation, Tourism, Trade and Industry with Shillings 81.16 billion, Lands, Housing and Urban Development with Shillings 164.75 billion, Social Development Shillings 90.17 billion, Information and Communication Technology 66.73billion, Public Sector Management Shillings 948.08 billion, Public Administration Shillings 760.96billion and Legislature 371.30 billion Shillings.

In the Previous 2014/2015 financial year, the Works and Transport sector was allocated 2.389trillion Shillings, Energy and Mineral Development sector Shillings 1.829trillion, Education Shillings 2.026trillion, Security Shillings 1.159trillion, Health Shillings 1.281 trillion, Justice, Law and Order sector Shillings 807.6billion while Accountability Institutions were allocated 1.188trillion Shillings.

The financial year 2015/2016 budget has been presented under the theme “Maintaining Infrastructure Investment and Promoting Excellence in Public Service delivery.”

Finance Minister Matia Kasaija said that the financial year 2015/2016 budget focuses on seven strategic areas citing maintenance of National Security and Defense, facilitation of Private Sector Enterprise Development, effective Development and Maintenance of Infrastructure and others.

Others include commercialization of Agriculture and Improved Productivity in Primary Growth Sectors, enhanced Capacity for Increased Domestic Revenue Mobilization, increased Social Service Delivery, and enhanced Efficiency in Government Management.

Kasaija added that government’s strategy this financial year and the medium term is to focus on accelerating infrastructure development to address the constraints to private sector growth and increase efficiency in service delivery.

While presenting the budget, Minister Kasaija noted that the economy is projected to grow at 5.8 percent in the financial year, largely on account of the recovery in private sector consumption, as well as acceleration in both public and private investment.

The Development expenditure is budgeted to grow by 58 percent in the financial year 2015/2016, mainly driven by major infrastructure projects. The budget deficit for the financial year 2015/2016 is projected to increase to 7 percent of GDP compared to 4.5 percent for the financial year 2014/2015.

Over the medium term, the deficit will average about 6 percent before it drops to about 4.5 percent in financial year 2019/20, in line with the East African Community Monetary Union Protocol. Finance Minister Matia Kasaija appealed to the Public to support the budget to enable economic growth.