CSOs have called for increased regulation in the financial sector, and demanded Bank of Uganda to enforce the regulation where commercial banks should not exceed 7 percentage points above or below the Central Bank Rate.
The organizations under the Civil Society Budget Advocacy Group [CSBAG] were yesterday meeting with the members of the Parliament Finance Committee to give their recommendations for the next financial year budget.
In the meeting, attention was drawn to the critical issues affecting the economy; among them were prevalent high interest rates which are at 21.69% according to the Bank of Uganda rate.
“The prevailing high interest rates are detrimental to private sector investment due to the high cost of accessing capital for investment, ” David Walakira, a Budget Specialist with CSBAG said.
Another concern was supplementary budgeting where Walakira questioned Government’s push for supplementary budgets. He said such behavior undermines the very essence of prudent budgeting and planning.
“Consider only supplementary expenditures which are un-absorbable, unavoidable and unforeseen as per the Public Finance Management Act Section 25(a)” he advised MPs.
Walakira also requested legislators as part of expanding the tax base to push for some tax proposals which included the re-introduction of graduated tax. “We need this money to increase citizens’ ownership of the budget,” he said.
CSOs criticized government agencies for poor absorption capacity as the money is returned to the consolidated fund. In a paper presented to the legislators, it was noted that in financial year 2013/14, Government entities returned unspent balances of UGX 9, 412,704,745”.
To reverse this trend, CSOs advised the legislators to push for punitive action against institutions that fail to absorb their development budgets by the end of the financial year. They also called on reforms in the procurement system which government agencies often state leads to poor absorption.
Ntenjeru North MP Amos Lugoloobi while responding to CSBAG position paper asked why the issues of the wage bill were not included. He also wondered whether the proposal to introduce graduated tax was from the public itself or the civil society group to expand tax base.
Nwoya Woman MP Lilly Adong asked CSBAG to engage KACITA on trading on a dollar as opposed to our local currency. “Can you engage them because they are the ones who ask for dollars instead of local currency,” Adong said.
The Vice Chair, of the Finance Parliament Committee Hon. Anthony Okello, lauded CSBAG for the comprehensive and analytical budget proposals that will spur economic development.
“Your input has always helped the Finance Parliamentary Committee with information that enables us to engage Government Officials in the budget process,” the Vice Chairperson of the finance committee, who is also MP for Kioga County, said.
He also urged CSOs to increase efforts in budget monitoring as part of minimizing wasteful expenditures that the Auditor General recorded at UGX 7,478,849,806 in the financial year 2013/14.