East African Community (EAC) member states have prioritised development expenditure as countries look to further strengthen the growth agenda of the regional economies.
In the national budget estimates presented yesterday, Tanzania will be spending $14.21 billion and Uganda $8.09 billion in the fiscal year 2016/17. Rwanda plans to spend some Rwf2.09 trillion compared to the Rwf1.95 trillion spent this fiscal year.
Kenya’s budget for the 2017/2018 fiscal year was presented in March to give room for the forthcoming general elections in August.
Burundi budget reading is not aligned with that of the other EAC member states.
The EAC states presented their 2017/18 budgets under the theme, ‘Industrialisation for job-creation and shared prosperity’.
Tanzania’s budget for 2017/18 will rise 7 per cent to Tsh31.71 trillion (about $14.21 billion), giving a budget deficit of 3.8 per cent of gross domestic product, Finance Minister Philip Mpango told parliament in the administrative capital Dodoma. Mpango added that the government plans to borrow Tsh6.17 trillion from domestic markets and another Tsh1.59 trillion will be external non-concessional loans.
Tanzania’s economic performance continues to rank among the highest in the region. The real GDP growth rate has consistently outpaced its EAC peers. The inflation rate remains relatively low. The current account deficit has significantly improved, with gross reserves sufficient to cover four months of imports. The shilling has also remained stable in 2016, following significant depreciation and volatility in 2015,” according to the latest IMF World Economic Outlook database.
Uganda’s spending will increase by 10 per cent in the fiscal year starting next month to Ugsh29 trillion ($8.09 billion) to support flagging economic growth.
Matia Kassaija, the Finance Minister, said the government would allocate money to reform key sectors in the economy, like farming and financial services, to help the country attain faster growth. The country will also invest in the petroleum sector infrastructure development, especially in the Albertine Graben region after oil was discovered in 2006.
“As a result of these actions, the economy is expected to rebound to annual growth rates of 7 per cent in the medium term, as a minimum,” he told lawmakers and other government officials, including Uganda’s President Yoweri Kaguta Museveni, as well as the diplomatic corps.
The minister said the government would borrow Ugsh954 billion from the domestic market, but did not say what the overall fiscal deficit was. Domestic borrowing in the 2016/17 fiscal year stood at Ugsh612 billion. Last year, the minister slapped a 400 per cent tax increase on personalised car number plates to boost revenue collections.
While presenting the budget speech in March, Kenya’s Finance Cabinet Secretary Henry Rotich, said the 2017/18 budget will focus on infrastructure development, agriculture, including agro-processing to spur the country’s growth, among others.
The government plans to spend Ksh2.29 trillion. It aims to raise Ksh1.7 trillion in revenues, while projects grants are expected to increase by 14.3 per cent. The overall budget deficit will amount to Ksh0.52 billion.
The country will be in a contractionary fiscal policy phase, as the government plans to reduce fiscal deficit by 21.3 per cent, resulting from a cut in development expenditure and an increase in estimated revenue.
Development expenditure will amount to 27.9 per cent of the overall estimated budget of Ksh2.29 trillion; this is less than the minimum 30 per cent threshold provided by law.