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Uganda Budgets
Uganda registered a substantial budget deficit for
every year
of the 1970s except 1977, when world coffee price
increases
provided the basis for a surplus. Deficits equivalent to
50 to 60
percent of revenues were not unusual, and the deficit
reached 100
percent in 1974. Although declining levels of production
and
trade, smuggling, and inefficiency all eroded revenues,
the Amin
government made only modest efforts to restrain
expenditures.
Amin increased government borrowing from local banks from
50
percent to 70 percent during his eight-year rule.
The budgets of the early 1980s were cautious. They set
limits
on government borrowing and domestic credit and linked
these
limits to a realistic exchange policy by allowing the
shilling to
float in relationship to other currencies. Between 1982
and 1989,
current revenue increased continuously in nominal terms,
in part
because of revisions and improvements in the tax system
and
depreciation of the shilling. In FY 1985 and FY 1986,
export
taxes--primarily on coffee--contributed about 60 percent
of the
total current revenue. Export taxes then declined,
contributing
less than 20 percent of revenues in FY 1989. The share of
sales
tax remained roughly constant at 20 percent from FY 1983
to FY
1986 but increased to about 38 percent by 1989. Income tax
increased its share of the total revenue from about 5
percent in
FY 1986 to about 11 percent in FY 1989.
Government expenditures increased during the early
1980s, and
the rate of increase rose after 1984. In 1985 civil
service
salaries were tripled, but in general, the Ministries of
Defense,
Education, and Finance, and the Office of the President
were the
biggest spenders. In 1988 and 1989, the Ministry of
Defense spent
roughly 2.9 percent and the Ministry of Education about 15
percent of the current budget. The percentage share of the
Ministry of Finance declined from about 30 percent in 1985
to
about 22 percent in 1989. The 1987 budget ended with a
deficit
amounting to 32 percent of total spending. This deficit
was
reduced to about 19 percent in 1988 and rose slightly in
1989 to
just over 20 percent.
The government implemented measures to reform the tax
system
in FY 1988 and FY 1989. A graduated tax rate, with
twenty-five
grades, rose from a USh300 minimum to a USh5,000 maximum
to
account for all classes of income earners. Overall income
tax
rates were raised in order to gain revenue for local
authorities
and to allow them greater self-sufficiency in rendering
public
services. The government also called upon local governing
bodies,
or resistance councils (RCs) to spearhead the war against
tax
evaders and defaulters by assuming responsibility for
assessing
and collecting taxes and monitoring the use of public
funds
(see Local Administration
, ch. 4). Despite all measures to
balance the
economy, however, the budget deficit in FY 1989 reached
USh38.9
million or nearly one-third of total spending, a
substantial
increase over the government's original target.
The FY 1989 budget sought to reduce current spending in
several government departments, including cuts of 25
percent in
the Office of the President and 18 percent in the Ministry
of
Defense, but defense spending in FY 1989 exceeded budget
estimates. At the same time, total government expenditures
increased to accommodate civil service wage hikes and
infrastructural rehabilitation. The government sought to
meet
these increased expenditures in part through a major
revenue
collection effort and increased external aid. To help
secure this
assistance, it implemented reforms, including cuts in
executive
spending, advocated by the
World Bank (see Glossary) and the IMF.
The FY 1989 budget also included agricultural producer
price
increases ranging from 100 percent to 150 percent. But at
the
same time, its reduced government subsidies for gasoline
and
sugar prices resulted in substantial price increases for
those
products.
In FY 1990, total government expenditures amounted to
USh169.3 billion, of which USh105.5 billion was for
current
expenditures and USh63.7 billion for development
expenditures.
Total receipts came to USh111.4 billion, of which USh86.5
billion
was current revenues--only 82 percent of anticipated
receipts--
leaving a deficit of USh57.9 billion or about 34 percent
of total
spending. As in earlier years, the ministries that
consumed the
bulk of current expenditures were Defense (39 percent) and
Education (14 percent), together with Foreign Affairs (4
percent)
and Health (4 percent).
Uganda operated under a separate development budget
during
the 1980s. This budget consisted of domestic revenues and
expenditures on development projects, but it excluded
revenues
from foreign donors. The development budget increased from
FY
1981 to FY 1988, primarily because of inflation, but was
trimmed
slightly in FY 1989. The Ministry of Finance and Ministry
of
Defense consumed most of the development budget, however,
in part
because agricultural and livestock projects were often
funded by
foreign donors. The Ministry of Housing also received
nearly 17.3
percent of FY 1988 development allocations, and much of
this
amount was earmarked for renovations on government-owned
tourist
hotels.
Data as of December 1990
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