East African Countries Unveil Optimistic Budgets as They Recover from an Economic Slump

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East African countries have tabled their budget allocation as they prepare for uncertain economic times . However, the budgetary estimates paint an optimistic future buttressed by tax waivers and economic incentives. In uncertain times, the countries have put in place measures to jumpstart their pandemic hit economies. Moreover, the countries are bracing themselves for declining revenue collection and increased government expenditure.

Uganda’s budget allocation stands at $12.61 billion, Tanzania’s at $15.59 billion and Kenya has laid out a budget of $33.3 billion. In addition, Kenya has set aside $133 million for the purchase of Covid-19 vaccines, while Uganda will use $159 million.

Kenya’s Ambitious Budget

According to an agreed arrangement by East Africa Community (EAC) partner states, countries are meant to unveil their budget on June 10th. So far, Kenya Uganda and Tanzania have honored the tradition. However, Rwanda and Burundi are yet to present their budgetary allocations. Burundi is still restructuring from the death of President Pierre Nkurunziza whereas Rwanda’s cabinet is yet to approve its budget.

Kenya’s budget has increased despite a ballooning national debt. On the flip side, Uganda has decided to downsize its budget allocation. This will cater for economic challenges brought about by the pandemic. Tanzania, on the other hand, expects public spending to rise by 4 percent in the 2021/22 financial year.

The Kenyan government has slashed both its development and recurrent expenditure targets. According to the National Treasury and Planning Cabinet Secretary Ukur Yatani, the $33.3 billion budget allocation will stimulate economic recovery and response to the post-Covid economy. Moreover, the treasury has saved $727 million after it signed debt repayment moratoriums.

“The financial year 2021/2022 budget estimates will be a reduction of $82.8 million on account of Government expenditure and $56.7 million on externally financed projects,” he told Parliament.

Budget Cuts

Kenya’s revised budget shows that allocations to Kenya Power and Lighting Company (KPLC) have been trimmed by $14 million. On the other hand, public universities, will have to contend with a $49 million cut on salaries and allowances. The Treasury has also cut its spending on wages, salaries, allowances, and administrative activities by $34.4 million.

A mix of domestic and external revenue will finance 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 has been provided to the military for peace, security and good governance.  Uganda’s budget allocation will also be supported by a steady increase in per capita income. For instance, it was $808 for the financial year 2015/16 and is projected to increase to US$932 in 2020/21.

“The key to rapid social economic transformation in Uganda rests on industrialization of agriculture and boosting private Sector business,” Uganda’s State Minister for Finance, Amos Lugoloobi said. Lugoloobi reported that the greatest share of resources is towards debt related payments, inclusive of domestic arrears. “Safeguarding debt sustainability should be prioritized. In this regard, there is need for continued domestic revenue mobilization,” He added.

Tanzania’s budget allocation expresses the government’s efforts to improve its business environment. The budget proposes to remove 15% on import duty to spur the growth of the manufacturing sector. The government also issued directives for banks to reduce interests on loans.

Tanzania’s Minister of Finance and Planning, Dr Mwigulu Nchemba has said revenue collection fell short by 13.9 per cent in the previous financial year. Dr, Nchemba said non-Tax Revenue amounted to Sh1.80 trillion, equivalent to 78.5 percent of the target. This was on account of Covid-19 pitfalls that saw Tanzania’s economic growth decline from 6.9% in 2019 to 4.7% in 2020.

About Dickson Soire

Dickson Soire is a journalist from Kenya. He endeavors to use his skills in journalism, teaching and animation to educate, inspire and entertain young audiences. He aims to create relevant, timely and informative videos and articles that make technical information accessible to the public.