Finance Minister Maria Kiwanuka yesterday unveiled a record Shs9.8 trillion budget for the 2011/12 Financial Year that seeks to expand government spending without raising taxes.
Reading her maiden budget just days after being appointed to the job, Ms Kiwanuka cut taxes on sugar imports, paraffin hand hoes and imported ambulances – all moves aimed at the poorest sections of society.

Ms Kiwanuka also removed Value Added Tax on the supply of solar energy equipment and reduced Import Duty on food supplements from 25 to 10 per cent.
In a budget clearly informed by recent protests over the rising cost of living and the lurking threat of widespread youth unemployment, the minister also announced a new Shs44.5 billion venture capital fund, to be run in partnership with DFCU Bank, to which government will contribute Shs22 billion
“This will be used to support youth starting or expanding their business enterprises. The loan sizes will range between Shs100,000 to Shs5 million or 20 per cent of injected equity for youth group investments,” she said.
Ms Kiwanuka also removed stamp duty on securities given in procuring small loans of up to Shs2 million to cut the cost of borrowing, while Import Duty on component parts and inputs for assembly of refrigerators and freezers was also cut from 25 per cent to 10 per cent.
Record budget
Announcing that the economy would grow by 6.3 per cent in the next Financial Year, slightly down from 6.4 per cent projected in the current Financial Year, Ms Kiwanuka’s Shs9.8 trillion budget is a jump from the current Shs7.5 trillion budget.
Some 71 per cent of the budget will be financed from domestic sources, down from 75 per cent in the current budget, Ms Kiwanuka said, taking donor budget support, which government has been keen to cut, up to 29 per cent.
The government has set a target of Shs6.3 trillion for Uganda Revenue Authority to collect of which Shs6.2 trillion is expected to come from tax revenues, Shs121 billion from non-tax revenues and Shs39 billion from domestic loan repayments.
Donors are expected to stump up Shs2.9 trillion and while some donor countries have threatened to cut aid over democratic and governance reversals, it was not immediately clear yesterday whether any cuts to committed funding had been communicated to government.
Highlighting priority areas needed to accelerate implementation of the National Development Plan and the NRM Manifesto, as well as tackling the key challenges currently facing the country, Ms Kiwanuka said the budget would put emphasis on infrastructure development of roads, railways and energy; enhancing agricultural production and productivity; creating employment, especially for the youth, women and in small and medium enterprises; and human resource development, and improving public service delivery.
Tight belts
To improve the effectiveness of government in order to deliver quality services, re-focus public service efforts for delivery of quality outputs, Ms Kiwanuka proposed key measures to reduce wastage, laxity, and limited responsiveness.
Some of the radical measures seeking to cut wastage include, among others, a 50 per cent cut in government advertising budgets and a 30 per cent cut in money spent on allowances, workshops and seminars, travel inland and abroad, fuel and vehicle maintenance, printing and stationary, welfare and entertainment, books, periodicals and newspapers, special meals and the purchase of furniture for selected ministries and agencies.
Others measures will include forensic audits, a freeze on the purchase of government vehicles, except for critical areas such as hospitals, police and the security services.
Cutting the fat from government ministries and agencies would save as much as Shs40 billion, the Finance minister said, but with a record-size Cabinet and Parliament, the new minister will faces hurdles in maintaining the cuts in the cost of public administration.
While the budget had no tax hikes, save for a doubling in the export levy on hides and skins, it also had no breaks for the middle-class or for business generally save for promises to reform the labyrinth of business regulation in the country.
“The levy on the export of raw hides and skins was intended to support and encourage value addition in Uganda. To achieve the government’s objective the levy is being revised from $0.4 per kilo to $0.8 per kilo on exports and outward processing of raw hides and skins,” Ms Kiwanuka said.
In keeping with the trend of previous years, most of the money, the minister announced, will go towards transport and energy infrastructure, as well as education where access to free education would be expanded although the promised university student loan scheme was deferred for at least a year.
Agric suffers
Funding for agriculture remained lower than government’s commitment of 10 per cent of the total national budget made under the Maputo Declaration despite the minister announcing that poor rainfall and drought severely affected the agricultural sector, cutting output of cash crops by nearly 16 per cent.
In his speech after the Budget was read, and a day after a lengthy State-of-the-Nation address, President Museveni singled out roads, electricity, railway, ICT, telephone, water, education and health as the foundation for national development.
“We must use our money in a cool-headed manner to build the foundation using step-by-step approach,” Mr Museveni said. The President also repeated his promise to tackle corruption. “The same way we dealt with the extra-judicial killing by executing soldiers who were killing people is the same we are going to handle those engaged in corruption.”
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