Civil society urges govt to clear domestic arrears

KAMPALA January 23, 2024 – The Civil Society Budget Advocacy Group [ CSBAG ] wants government to enforce mechanisms aimed at controlling the increasing domestic arrears.

The CSBAG officials expressed concern that the rate at which the arrears have accumulated is worrisome and reflects little or no effort to enforce the 2021 strategy to eliminate and control domestic arrears.

In the next financial year, government has allocated Shs 217 billion to clear part of domestic debt, which are its obligations towards local contractors who supplied goods and services to ministries, departments and agencies.

According to the latest Auditor General’s report, the total public debt as at June 30, 2023 stood at 97.499 trillion of which domestic debt stock was Shs 44.673trn.

Steven Alor, an economist at CSBAG said that if government continued allocating Shs 217bln to clear its domestic arrears annually, it would take up to 35 years for all its creditors to be paid, considering that no more arrears would be accumulated. He said this has stifled the private sector-driven economy’s growth.

CSBAG called on government to enforce strict control mechanisms, including holding accounting officers who flout the Public Finance Management Act by accumulating arrears with no effort of payment, culpable.

They also want Parliament to push for an increase in budgetary allocation to clear domestic arrears in the next financial year.

CSBAG presented a list of expenditure budget items that could wait as a strategy to secure more money for clearing arrears and cater for other unfunded priorities. These include donations, official ceremonies, state functions, travels, workshops, and classified assets and expenditures.
“We are talking about repurposing; we are looking for where to get money apart from fighting corruption. We, for example, do not know the details of the classified budget, but MPs who look into it can consider those items that could wait,” Jeff Wadulo, the Programme and Policy Advisor CSBAG, said.

Members of Parliament on the Budget Committee agreed with the CSBAG, citing some of the arrears not budgeted for in the coming financial year.
“There are arrears within government assurances that should be prioritised. The Minister of Finance committed on the Floor of Parliament that the government would clear its debts on coffee and tea seedlings, but it is not provided for; these should be prioritized because government committed,” said Abed Bwanika, who represents Masaka City’s Kimaanya-Kabonera Division in parliament.

Buyamba County MP, Gyaviira Ssemwanga said that, “these are domestic suppliers who procured loans from the banks; if they are not paid there is a net effect on the economy.”

According to the Auditor General’s report, the increasing trend in the government debt position reduces the available resources for both funding development projects and service delivery as huge resources will be directed towards debt repayment.

Like CSBAG, the Auditor General in his report advises government to consider reviewing its current debt strategy with a view of incorporating more effective approaches aimed at containing the upward debt position trend.

Meanwhile, the Budget Committee has completed the process of receiving reports from sectoral committees on the Budget Framework Paper for all sectors. The committee has prepared a report highlighting critical programmes that have not been budgeted for that could still be considered.

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