THE FY 2012/13 B UDGET SHOULD BE
MORE STRATEGIC
Over the last twenty five
years, Uganda’s economy has
registered an average growth
rate of about
6.5 percent per annum. Even during the
current period of slow
recovery in the
global economy from
the financial crisis which started
around FY 2008/09, our economy
has remained resilient
registering a 6.3perent growth last
FY2010/11. While the economy
proved resilient to the
shocks of the 2008
financial crisis, this resilience is now being
tested by both domestic
developments and the deterioration
of the international economic environment.
Although the global economy will continue to suffer considering the ongoing
sovereign debt crisis in the Euro Zone. It’s worth
noting that the IMF
has substantially reduced
its 2012 economic
growth projection for
Uganda to below
5.0 percent in the
financial year 2011/12 which
should help Uganda make strides towards
speeding up the process
of attaining middle
income status in the
medium term.
Since last
year, economy has experienced a very challenging
macroeconomic environment arising
from supply side driven inflationary pressure
,exchange rate volatility and
the impact of
the ongoing economic crisis in
Euro Zone. The slowdown has
negatively impacted the
level of capital and financial flows to Uganda
while weakening our
export base, resulting into weakening of the
balance of payment position. The weak Balance
of Payment stems from deterioration in terms of trade, reduced export earning, lower remittances
and low foreign direct investment
and portfolio inflows. These factors have in turn combined with
international investors uncertainty to
exert pressure on the exchange rate and subsequently
domestic price levels.
The FY 2011/13
budget is coming at time when Uganda is going through economic hardships like unacceptable high inflation rate,
deprecating exchange rate, low and uncertain agricultural production and
productivity ,infrastructural
constraints and the ongoing
economic slowdown in the major economies especially
the Euro zone .
There are already strong indications that the BOU’s policy of raising interest
rates is starting to work. Annual headline inflation peaked in October last
year and has been gradually falling since then. This progress is not simply
attributable to the fall in food crop prices over the last two months; core
inflation, which excludes food crops, has also fallen gradually since October.
The growth in bank lending, which had been very rapid in the first nine months
of 2011, and which was beginning to pose serious inflationary risks, has since
begun to slow down; this is a direct result of policy of raising interest
rates.
This therefore
requires us to
put in place other right
policies, institutions and address
the major impediments
to growth . we must
understand that economic
growth is only
one aspect of
development . Another key dimension
of development is
the improvement in the
administrative capacity of the
state in order to direct
the course of
development. It’s now time to focus
on those interventions that will quicken the pace of development,
overall transformation of the
economy and improved
welfare of every Ugandan. It’s
important for government
to focus on prudent
macroeconomic management ,
including consistent monetary
and fiscal policies ,as
well as stepping up domestic
revenue mobilization.
Government
should also consider re-balancing of
budget priorities to put
the county on a sustainable growth path to achieve a long term
vision of economic action in a middle income economy. The
budget strategy for the FY
2012/13 should focus on ensuring macroeconomic stability in particular bringing
inflation to acceptable levels and
improving Uganda’s external competiveness with in the
overall framework of the National Development Plan .
Citizens need a budget that is more strategic and considers peoples priorities....
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