Government Seeks Alternative Revenue Sources Amidst Global Credit Market Hurdles

The Minister of State for Finance, Henry Musasizi, has announced that the government aims to generate UGX1.9 trillion from newly proposed taxes on cement, fuel, land transactions, and mineral water. This revenue will contribute to funding a portion of the UGX 58.340 trillion national budget for the Financial Year 2024/2025.

Speaking before the parliament’s budget committee on April 3, 2024, Musasizi defended the proposed budget and outlined plans for addressing a projected revenue shortfall. He disclosed that Uganda has opted out of borrowing UGX1.605 trillion from external sources due to the high interest rates prevailing in the global credit market.

Musasizi cited exorbitant interest rates, such as 10% per year for dollar loans and 8% to 9% annually for euros, as prohibitive and posing significant risks to debt sustainability. Consequently, the government will refrain from seeking external commercial loans for general budget financing until global interest rates become more affordable.

In light of these challenges, the government introduced new taxes on cement, fuel, mineral water, and land transactions to bolster revenue streams for the 2024/2025 budget, as originally planned by the Ministry of Finance.