To pay the salaries of Soldiers, finance secret expenditures, and meet other financial commitments, Uganda had returned to the global market in search of commercial loans.
The Uganda Government gives the top priority to the payment salary rise that was expected to begin on July 1 for the Uganda People’s Defence Forces. Other government employees also want money.
The medical interns in Government hospitals went on strike in the second week of November because of delayed payment, salary disparities, and other welfare issues.
The interns informed the minister of Health that they are in a starving mental and physiological state and they are unable to work so they are going on a strike. Later, the Ministry of Health claimed that their concerns will be handled, and asked them to refrain from striking at a time when the nation is dealing with the Ebola Virus.
A few months ago, when the government promised to increase the salaries of science teachers, the other teachers went on strike over these pay disputes. The tutors demanded equal pay following the government’s decision to increase the salaries of science teachers.
Even the Parish Development Model, which president Yoweri Museveni has promoted as a plan to move Uganda’s economy from a peasant economy to middle-income status, has met the same fate in what some see as signs of a bankrupt government: lack of Funds.
Government agencies were left without enough financing for their initiatives in the first quarter of the current financial year, except for funding projects related to defense and security and the payment of employees.
By the end of the quarter, many public employees hadn’t yet received their entire pay.
The finance ministry had stated that it wants to borrow Ush3.7 trillion ($986.2 million) from commercial lenders, which is a significant shift from the country’s previous reliance on concessional credit options to cover its budget deficit.
In addition to the existing syndicated Sh1.7 trillion borrowing being handled through Standard Chartered Bank, the government has approached potential global private sector lenders to advance $500 million (Ush1.9) to cover the 2022-2023 budget gap.
Finance minister Matia Kasaija stated during a public teleconference on November 7 that the government is looking for a new credit line to balance the equivalent of Net Domestic Financing (NDF) that has been authorized for the current financial year.
In the request for expressions of interest, the minister asked any potential creditors to set the interest rate and agreed that the loan will be repaid within a decade, with actual loan servicing starting in the fourth year.
“Due to strict implementation guidelines, we request you to submit your expression of interest by the closure of November 18,” the finance minister Mr Kasaija wrote.
Additionally, he demanded that no fees for loan structuring, legal advice, agency fees, or other commitment costs be added to the Ush1.9 trillion that is sought from the potential lender.
Approximately, 71% of the budget for the current financial year, which began on July 1, is set aside for recurrent expenses, while 29% is budgeted for development. The budget for the 2022-2023 financial year is Shs48 trillion.
The government revealed plans to borrow up to Shs19 overall during the budget reading, generate Shs25 trillion in domestic revenue, and receive Shs2 trillion in grants.
With an economy that has been severely impacted by COVID-19, inflation, and an extended famine, Mr Kasaija, the finance minister, said that the pressure was high and that he was concerned.
Although bilateral and multilateral lenders are available, some experts argue that the country may be rushing to borrow from private lenders to evade scrutiny, particularly since the money it had previously borrowed has been used more for consumption than for development.
Politicians in the opposition, like opposition leader Mathias Mpuuga, argue that to ensure the jobs are maintained, the government should cut back on politically motivated public spending and make money readily available to essential sectors.