The Minister of State for Finance, Henry Musasizi, has revealed that government intends to generate Shs1.902Trn from the recently proposed taxes on cement, fuel, land transactions, mineral water etc, in order to finance the Shs58.340Trn budget for 2024/25 financial year.

Musasizi made the remarks while appearing before Parliament’s Budget Committee where he had been summoned to defend the proposed 2024/25 national budget.

“Following the consultations with stakeholders, we agreed that the budget for 2024/25 required to implement the above priorities amounts to Shs58.340,862,552,130 from Shs52.722,682,928,740 of the National Budget Framework Paper on account of additional Shs1.902Trn which we expect through new tax policy and administrative measures,” the Minister said.

The Minister also revealed that due to the skyrocketing interest rates within the global credit market, Uganda has backed off plans to borrow $414M (Shs1.605Trn) from the external lenders, in order to cover the gap that has been created by revenue collection shortfalls, as such borrowing would exert pressure on Uganda’s public debt sustainability.

“The approved budget for 2023/24 projected external borrowing of $414M (Shs1.605Trn) from external sources to cover the revenue gap, however, this hasn’t materialized, because interest rates are currently very high globally. We shall live within the available resources of FY2023/24.

For example, the interest rate on dollar loans are about 10% per year and for Euro loans, they are between 8-9% annually. These aren’t affordable and would pose a significant risk for the debt sustainability.

We will not therefore borrow externally on commercial terms for general budget financing until the global interest rates reduce to affordable levels. To finance the gap arising from the decision not to borrow the US414M,” said Musasizi.