Uganda plans over 7% rise in spending to mitigate price shocks

The government of President Yoweri Museveni is banking on the start of crude oil production in 2025 to accelerate economic growth in the wake of the pandemic. Helped by an increase in budget and grant revenues, Uganda is targeting a smaller 5.4% of gross domestic product deficit in the 2022/23 fiscal year, down from 7.3% of GDP in 2021/22.

Uganda plans total spending of 48.1 trillion Ugandan shillings ($12.83 billion) in the next fiscal year, up more than 7%, Finance Minister Matia Kasaija said on Tuesday, after protests over price rises. In a budget speech for the 2022/2023 fiscal year, starting next month, Kasaija said Uganda would prioritise efforts "to mitigate the impact of price shocks" linked to the war in Ukraine and the COVID-19 pandemic.

A surge in inflation, fuelled by a rise in prices of fuel, cooking oil, wheat and other staples, has triggered widespread public anger and protests from the opposition. Kasaija said the government would channel significant resources to help expedite commercial oil production and the development of an oil refinery while also using a state-run development bank to provide "soft and patient debt" to agro-processing businesses.

It would also aim to build additional fuel storage and stock it adequately. The government of President Yoweri Museveni is banking on the start of crude oil production in 2025 to accelerate economic growth in the wake of the pandemic.

Helped by an increase in budget and grant revenues, Uganda is targeting a smaller 5.4% of gross domestic product deficit in the 2022/23 fiscal year, down from 7.3% of GDP in 2021/22. Its medium-term target is a deficit of 3% of GDP.

Africa's biggest coffee exporter plans to borrow around 5.0 trillion shillings from domestic markets and 4.7 trillion shillings from external markets, Kasaija said, adding that no new taxes would be introduced in 2022/23. The government is targeting medium-term growth of 6.5% a year, up from a projected 4.6% in 2021/22 and 5.5% in 2022/23.

International reserves stood at $4.5 billion at the end of April, equivalent to 4.6 months of import cover, up from $3.6 billion a year earlier. ($1 = 3,750.0000 Ugandan shillings) (Additional reporting by Hereward Holland in Nairobi; Editing by Alexander Winning and Alison Williams)

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