Election funding: Uganda is broke, says Bbumba as tough times loom
Posted Monday, February 14 2011 at 00:00
When the 2010/11 financial statement was presented, it was duly decried by analysts as a “populist election budget.”
It is only now that the gravity of that statement is dawning on the country: Public finances have been drained to fund election campaigns.
The treasury is clueless on how to clean up the mess; and economists are predicting tough times ahead for the economy as inflation soars.
By December 2010, the midway point of the Ugandan financial year, Ush6.4 trillion ($2.75 billion) had been appropriated of the Ush7.3 trillion ($3.14 billion) 2010/11 national budget and of this, Ush3 trillion ($1.29 billion) had been spent.
In January, parliament approved a supplementary budget of Ush602 billion ($260 million), pushing the total figure to Ush8 trillion ($3.4 billion) following additional budget allocations for State House, the Electoral Commission, the army and the Inspectorate of Government.
Within a few weeks, Finance Minister Syda Bbumba admitted that the government was broke, a statement that invited uproar and scrutiny of the government’s fiscal discipline.
It turns out, instead, that the money was channelled into the National Resistance Movement’s campaign.
“The money has gone into the campaigns and not productive sectors. If it were for capital development, it would be known. It is being consumed and to recoup it will take us about three years. This means the cost of living is going to go up while the standard of living will go down,” said Nandala Mafabi, chairman of parliament’s Public Account Committee.
On closer scrutiny of public finances, it turns out that 85 per cent of the entire budget has been spent, but more importantly, Ush3.2 trillion ($1.3b) was blown in January alone, an official at the Ministry of Finance said.
In the short term, economists further warn, various projects will stall as there will be a squeeze in development spending.
“The money will be going into administrative spending. These are areas that do not produce goods and services. In the long run, it will affect the growth of the economy,” said Dr Evarist Twimukye, senior research fellow at the Economic Policy Research Centre.
This is crisis time; Treasury is left with only Ush1 trillion ($432 million) to spend over the next five months.
The puzzling question is how it intends to fix the mess left by NRM’s rapacious feeding on the public purse.
A raid of the reserves will not do as these are negligible — only enough to support the country’s import bill for five months.
Printing more money would run foul of Central Bank officials desperate to keep inflation at bay.