East African countries put up bullish budgets as they recover from an economic slump
The East African countries have submitted their budget allocations to prepare for uncertain economic times. However, the budget estimates paint an optimistic future backed by tax exemptions and economic incentives. During uncertain times, countries have taken steps to stimulate their pandemic-hit economies. In addition, the federal states are preparing for falling revenue and increased government spending.
Uganda’s budget is $ 12.61 billion, Tanzania is $ 15.59 billion, and Kenya has a budget of $ 33.3 billion. In addition, Kenya has allocated $ 133 million to purchase Covid-19 vaccines, while Uganda will use $ 159 million.
Kenya’s ambitious budget
According to an agreement between the partner states of the East African Community (EAC), the countries are to present their budget on June 10th. So far, Kenya, Uganda and Tanzania have honored the tradition. However, Rwanda and Burundi have yet to submit their budget allocations. Burundi is still in the process of restructuring following the death of President Pierre Nkurunziza, while Rwanda’s cabinet has yet to approve its budget.
Kenya’s budget has risen despite skyrocketing national debt. On the other hand, Uganda has decided to reduce its budget allocation. This takes into account the economic challenges posed by the pandemic. Tanzania, on the other hand, expects government spending to increase by 4 percent in the 2021/22 financial year.
The Kenyan government has cut both its development goals and its current spending goals. According to the Minister of National Finance and Planning Cabinet Ukur Yatani, the budget allocation of $ 33.3 billion will stimulate economic recovery and the post-Covid economy response. In addition, the Treasury Department saved $ 727 million after signing a moratorium on debt payments.
“The budget estimates for fiscal year 2021/2022 will be a cut of $ 82.8 million for government spending and $ 56.7 million for externally funded projects,” he told Parliament.
Kenya’s revised budget reveals that allocations to the Kenya Power and Lighting Company (KPLC) have been cut by $ 14 million. Public universities, on the other hand, will face $ 49 million cuts in salaries and allowances. The Treasury Department also cut its wages, salaries, benefits and administrative expenses by $ 34.4 million.
A mix of domestic and external income will fund Uganda’s budget. The Ugandan government also expects to raise $ 56.2 million from the Petroleum Fund and $ 1 billion from budget support. Of the budget, $ 1.9 billion was made available to the military for peace, security and good governance. Uganda’s budget allocation is also supported by a steady increase in per capita income. For example, for fiscal 2015/16 it was $ 808 and is expected to increase to $ 932 in 2020/21.
“The key to a rapid socio-economic transformation in Uganda lies in the industrialization of agriculture and the promotion of the private sector,” said Uganda’s Minister of State for Finance, Amos Lugoloobi. Lugoloobi reported that most of the funds will be used for debt-related payments, including domestic arrears. “Securing debt sustainability should be a priority. In this regard, continued domestic revenue mobilization is needed, ”he added.
The budget allocation for Tanzania reflects the government’s efforts to improve the business environment. The budget plans to cut 15% of import duties to stimulate manufacturing growth. The government also issued guidelines for banks to lower the interest rate on loans.
Tanzania’s Minister of Finance and Planning, Dr. Mwigulu Nchemba said revenue collection fell 13.9 percent in the past fiscal year. Dr. Nchemba said non-tax revenue came in at Sh1.80 trillion, which is 78.5 percent of the target. This was due to Covid-19 pitfalls that caused Tanzania’s economic growth to decline from 6.9% in 2019 to 4.7% in 2020.