Saturday, June 5, 2010

Uganda's Budget Strategy for 2OO7/08 Fiscal Year

Below are the priorities identified for the FY 2007/08 Budget.
By Ultimate Media Consult
First published: June 14, 2007
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4.1 Main Challenges
4.1.1 Population Growth
Uganda has one of the highest population growth rates in the world. This creates an economic opportunity, as the current cohort of young people under the age of 15 (half the population) enters the labour-force. But the existing numbers of young people are putting an enormous strain on the Government's ability to deliver services, and this problem will continue so long as the high fertility rate persists.
4.1.2 Energy Crisis
By the end of FY 2004/05 and leading into FY 2005/06, the supply ofelectricity was in a crisis. Water levels in Lake Victoria were at the lowest since the construction of Owen Falls Dam in 1954. Use of water for energy generation had to be regulated to avoid draining the Lake to an environmentally dangerous level. Power generation fell from a peak of 380 MW to 135 MW in mid-2006. This resulted in frequent load shedding, which in turn reduced the rate of growth of GDP in 2005/06.
4.1.3 Conflict in Northern Uganda
After 20 years of conflict in Northern Uganda, peace talks opened in 2006 between Lord's Resistance Army/Movement (LRA/M) rebels and the Uganda Government in Juba, South Sudan. Many stakeholders regard the talks as the best opportunity in 20 years for peace in Northern Uganda. A Cessation of Hostilities Agreement signed on 26 August 2006 between the Government of Uganda and the LRA is seen as a major break-through. However, the talks have faced serious challenges. This carries the implication that security in the region may continue to remain uncertain.
4.2 Budget Strategy for 2OO7/08 Fiscal Year
Government strategy will continue to sequentially align all expenditures towards the priority areas as identified in the PEAP and the Prosperity for All Programme. Increasing incomes beyond the subsistence level and stimulating growth require a sustained orientation of Government's expenditures towards effective programmes for infrastructure and rural development, together with critical interventions for human development. The FY 2007/08 Budget will therefore focus on those critical actions, which have a direct bearing on increasing productivity, household incomes and overall economic development. The interventions that the Government will prioritize are as follows:
i) Investments in Energy and ICT
ii) Development and Maintenance of Transportation Infrastructure
iii) Rural Development
iv) The Rehabilitation of Northern Uganda
v) Science, Technology and Industrial Development
vi) Universal Secondary Education
In order to achieve these objectives, the above interventions will have priority access to the available resources in next year's budget. Other priorities that have been identified outside these areas will therefore require efficiency gains to be implemented within their respective sectors and ministries. Below are the priorities identified for the FY 2007/08 Budget.
4.2.1 Infrastructure Development
Development of infrastructure is a critical ingredient to competitiveness and private sector investments. The private sector will increasingly be the driver of Uganda's economic growth, and impediments to its growth will have to be carefully addressed. The continued growth of the private sector needs to be supported with public investments and a sound business environment. This includes an efficient reliable infrastructure base where there is adequate and reasonably priced electricity, well-maintained roads and a sound railway system for movement of bulky commodities. The FY 2007/08 budget will therefore focus on improving the business climate by developing productive infrastructure in energy, roads and information and communication technology.
4.2.1.1 Energy
Energy is a critical component of all economic programs, but particularly industrialization and value addition for increased overall competitiveness of the economy. The present constraints to the generation of reasonably priced and adequate electricity have negatively affected growth of the economy over the last few years. Government has therefore prioritized the immediate construction of the Bujagali Hydropower project in order to ensure that the expensive thermal power generation is replaced with a cheaper alternative in the shortest time possible. While the construction of the Bujagali Hydro Project is led by the private sector, Government intends to support whatever interventions are necessary to expedite the completion of the dam.
Construction of the Karuma Hydro Power Project will also need to be started as soon as the necessary preparatory studies are complete because it is evident that the demand for electricity will outstrip supply even after the Bujagali Hydro Project is completed. The Government cannot afford to return to the crises of early 2005 when the economy faced the possibility of shut down.
The Energy Investment Fund will therefore be supplemented annually over the medium term to provide enough resources to fund the construction of these dams and also provide for the necessary investments in the transmission and distribution systems if the private sector is not able to do so.
Thermal power generation will only be used to mitigate the energy shortfall until the installation of new hydroelectric generation capacity is achieved. Government has also completed the procurement of a permanent 50 MW Heavy Fuel Oil (HFO) thermal plant that will be used over the next decade to deal with temporary electricity shortfalls.
4.2.1.2 Road Infrastructure
Road infrastructure continues to be a major impediment to economic activity, both in rural agricultural activity and modern urban commerce and manufacturing.
Two critical activities in the management of road development need to be addressed. First, there is an inadequacy of institutional capacity for the effective and efficient development and maintenance of road infrastructure. This has led to delays in the implementation of new road projects and associated cost overruns. The second inadequacy arises from the insufficiency of funding to undertake road infrastructure maintenance.
Two interventions have been designed for dealing with the institutional weaknesses that have been identified. The first is the newly operationalized, Uganda National Road Authority, which will be responsible for new road development, the management of road maintenance, road machinery management and axle load control, among others. With the Road Authority in place, the Ministry of Works and Transport will only have the responsibility of providing strategic management and oversight functions such as monitoring the performance of the Authority.
The second institutional remedy that has been designed relates to the financing for road maintenance. The Road Fund, which will come into force in July 2007, will allow the direct link between payment of road user charges and provision of road maintenance services, thereby increasing the overall operational efficiency of the road sector. The funding for national roads maintenance through budget allocations has consistently proved inadequate leading to the accumulation of the maintenance backlog.
While other qualifying expenditures for a Road Fund could include rehabilitation and new works, road maintenance will have the first call on resources from the Road Fund. The extent to which road rehabilitation and new works can be financed will depend on the total resources available within the Fund. The Road Fund will be financed through road user-charges includinga fuel levy, annual vehicle license fees, weight distance charges, and international transit fees. The selected stream of revenues will be directly placed into the Road Fund without being subjected to the budget process. This will serve to ensure that road maintenance receives adequate funding and will enable the backlog of road maintenance to be cleared.
4.2.1.3 Information and Communication Technology
Uganda has made great strides as a result of the steady reform of the telecommunications sector in the 1990s. Telecommunications has been the most promising infrastructure sector and has contributed greatly towards improving welfare. Despite these positive trends, the performance of the sector remains below the international average. While the penetration rate has increased significantly from 0.4% to 4.4% of total population between 1990 and 2002, 80% of the country's digital phone lines and modern switching technology is found in Kampala. In rural areas, access to ICT is restricted by inadequate and sparse infrastructure. Fixed line technology is almost non-existent. Mobile penetration rates of 2% remain low due to the high cost of airtime and handsets, and a lack of electricity for charging the handsets.
Government has therefore commenced the construction of a National Data Transmission Back Bone in order to provide greater communication capacity at a lower cost and also satisfy the growing demand for modern fiber optic networks. This will increase international connectivity and lower high Internet connection tariffs, and will also facilitate increased capacity, quality delivery of voice, data, and image services and applications that cannot be reliably met by simple dial-up and ISDN technologies. By the time this project is completed, Government will have developed the necessary infrastructure to support E-Government.
4.2.2 Rural Development
The Prosperity for All Programme (PfA) has developed a special intervention to raise the incomes of households through the identification of viable economic activity and ensuring that household output can be marketed at better prices. The programme entails the combination of measures to increase output, improve storage and marketing and processing capabilities. As a response to constraints households may have in obtaining inputs, the programme will develop rural financial services through savings and credit cooperatives.
Over the short to medium term, households will be facilitated in a sequential manner to access basic production inputs such as planting materials, breeding stock and extension services, marketing infrastructure and rural financial services required for effective implementation of selected viable livelihood strategy.
At the community level, Government is already building an effective and supportive community infrastructure in the form of roads, water, education and health facilities. This will be complemented by the Community Information System (CIS) to enable the communities themselves to generate information for use in planning and service delivery.
4.2.2.1 Sub-County Development Strategy
To strengthen the delivery of services under the Prosperity for All Programme Government will work directly with the Sub-counties. The Sub-county Development Strategy (SCDS) will therefore aim at ensuring that there will be a link between household production needs at the lowest level of Government and the outcomes and development results targeted by Government at the national level.
The value and appropriateness of implemented activities and outputs of local communities and households will be of primary importance to this strategy. The SCDS will therefore attempt to optimize development results in all Sub-counties through uplifting household incomes, marketing, access to rural financial services and effective use of the CIS.
4.2.2.2 Agricultural Extension Services
The NAADS programme has been successful in providing essential agricultural advisory services to farmers; establishing strategic partnerships with private sector operators; and directly linking farmers and Farmer Associations with key market actors. The FY 2007/08 budget will continue to support NAADS and enable the sub-counties to uplift household incomes through improved organization, productivity, value addition, marketing, increased access to rural financial services and the establishment of the CIS.
Financing will therefore be made available in the budget for the provision of inputs for the production of coffee, tea, cotton, fish farming, and fruits. In addition, funds will be provided to facilitate Sub-county Chiefs and technical officials (e.g. Sub-county veterinary doctors, agricultural officers and community development.
assistants) to sensitise households and enable planning, monitoring and evaluation of NAADS programmes to be enhanced. These change agents will be responsible for identifying to households the most viable commodities to produce and also coordinate their activities with Savings and Credit Cooperative Organizations (SACCOs) to provide the necessary credit to households and cooperatives to ensure increased market access.
4.2.2.3 Rural Financial Services
As part of the Sub-county Development Strategy, Government will continue to assist the micro-finance sector in rural and urban areas by supporting the establishment, strengthening, expansion and consolidation of both Micro Finance Institutions (MFIs) and SACCOs. This should provide the necessary credit lines to households and cooperatives to increase production, and improve their access to markets.
4.2.2.4 Marketing
A good marketing system is expected to link producers to consumers, both domestic and foreign, combined with strategies for processing to add value, reduce bulk and increase shelf life. Government's approach to marketing and agro-processing is set out in the Marketing and Agro-Processing Strategy. Priority actions to address marketing constraints include: trade policy/negotiations and finance, producer support, infrastructure, and export competitiveness.
Investment and strategic exports promotion, with emphasis on value addition through cluster development, will be among the priorities to ensure competitiveness. This is spelt out in the Competitiveness and Investment Climate Strategy (CICS 2006-2010), which seeks to operationalise Pillar II of the PEAP with the aim of enhancing access to markets and attracting of investors. It is in this strategy that a framework for harmonizing initiatives under PMA, Rural Development Strategy (RDS) and PfA is hinged through the promotion of Public Private Partnerships (PPP) among the productive sector.
4.2.2.5 Water for Production
Table 4.1 shows that progress with physical construction of water facilities in 2005/06 was satisfactory in most outputs. Work on the feasibility study for bulk water supply countrywide, and the development of guidelines for water for production needs to be undertaken.
Active implementation of the program for small-scale irrigation for at least 27 districts will start. Additionally, the rehabilitation of irrigation schemes at Mubuku, Doho, and Olweny will be expedited to prepare them for the necessary hand-over to user farmer groups in their respective areas. Funds to address rain stressed areas through implementation of low-cost rain-water harvesting technology will also be specifically provided.
Table 4.1: Water for Production: progress against plans for FY 2005/06
Plan Achieved %
Wind-powered systems installed 2 2 100%
Valley tanks constructed 9 10 110%
Valley tanks commissioned 43 26 60%
Dam reconstructed 1 1 100%
User committees trained 43 44 102%
Staff trained 8 5 63%

Source: Ministry of Finance, Planning and Economic Development
4.2.3 Northern Uganda Reconstruction
With the renewed peace and security in Northern Uganda as well as ongoing peace talks, the FY 2007/08 budget will focus on the reconstruction of Northern Uganda. To improve coordination of rehabilitation and reconstruction of Northern Uganda, the Government has launched the National Peace, Recovery and Development Plan (PRDP) for Northern Uganda. Strategic interventions will be undertaken through 14 priority programs over the medium-term, and spread over four key areas namely:
i) Consolidation of state authority involving the cessation of armed hostilities, re-establishing the rule of law, protection of human rights, strengthening local governance and expanding the road density in the area as insurance against any future malign elements;
ii) Rebuilding and empowering communities through improvement in conditions and quality of life in the IDP camps while facilitating the return and re-integration of the displaced populations;
iii) Revitalisation of the economy by paying special attention to re-activating and strengthening production, marketing, processing and services;
iv) Peace building and reconciliation between the victims and perpetrators of the crimes.
A Joint Monitoring Committee (JMC) has also been established to address security and humanitarian issues. The Northern Uganda Social Action Fund continues to provide assistance in the area and community based interventions have been introduced in 119 projects. The Northern Uganda Youth Development Centre has also been established, and the Northern Uganda Rehabilitation Program has been completed.
4.2.4 Universal Secondary Education
Investment in human capital by providing quality and affordable education is essential for Uganda to attract foreign investment. In January 2007, the implementation of the Universal Post-Primary Education and Training (UPPET) commenced. UPPET will serve to absorb the increasing numbers of pupils completing primary education as a result of the UPE initiative and will aid in the transformation of our economy.
4.3 Sectoral Allocations
The allocations in the MTEF reflect the projected increase in resources and the identified budget priorities. Accordingly, allocations to the Works and Transport, Education, Agriculture, and Economic Functions sectors increase in nominal terms to cater for the priorities under these sectors. The share of the health sector will decline on account of a reduction of donor project aid that cannot be fully compensated for by *GoU resources. Despite the decline in overall share however, the health sector registers a 3.5% growth in the GoU resource allocations.
CHAPTER FIVE: Medium-term Fiscal Outlook
5.1 Overview
On the domestic revenue front, the main focus in the medium term is to ensure continued stability of the tax system and improve the collections from other revenue sources, especially Non-tax Revenue (NTR). Government may also make modest adjustments in tax rates or propose new taxes in order to finance Government programmes in the medium-term. However, the scope for this option is very limited.
The projected tax revenue in the medium-term assumes stability of the tax system. This implies that any pressures to destabilise the tax system must be resisted. Important to note are pressures to raise the PAYE threshold, which would result in a revenue loss of U Shs. 93 billion. In addition, there are pressures to provide more tax incentives which will also adversely affect tax revenues. It is important to resist these pressures if we are to achieve the Tax Revenue/GDP ratio target of 0.5% growth per annum, which is essential to ensure long-term fiscal sustainability. There is also a need to carry out proper analysis and evaluation of the impact of tax proposals on revenue, equity and attraction of investment before their implementation. In addition to the above pressures, there are challenges to revenue mobilization. These include the existence of large subsistence and informal sectors; also the current energy crisis has resulted in enterprises across sectors requesting duty-free diesel for the use in their business operations.
5.2 Resource Envelope Projections
The sources of funds for the Government budget comprise domestic tax revenue, non-tax revenue, external donor grants and loans, less the financial requirements of external debt repayments and the domestic financing requirements needed to accommodate the monetary policy and foreign exchange reserve objectives.
The largest component of the resource envelope is domestic revenue, which comprises of 64% of next fiscal year's projected resources. The resource envelope for the medium-term is set out in Table 5.1 below;
Table 5.1 Medium-term Resource Envelope Projections
Uganda Shillings Billion Budget 2006/07 Proj. Outturn 2006/07 2007/08 2008/09 2009/10
A. DOMESTIC REVENUES 2,569.1 2,652.8 3,058.5 3,420.0 3,831.2
URA Revenue 2,524.9 2,555.0 2,961.2 3,329.9 3,749.5
o/w new measures 46.0 - - - -
Non URA Revenue 41.9 95.5 95.0 83.2 74.7
Loan Repayments 2.3 2.3 2.3 6.9 6.9
B. BUDGET SUPPORT 822.3 1,111.0 710.6 691.4 658.5
Loans 561.9 817.7 201.9 203.6 205.2
Grants 260.4 293.3 508.7 487.9 453.3
C. PROJECT SUPPORT 1,039.2 1,128.3 1,124.0 1,358.1 695.5
Loans 557.0 483.4 654.5 918.2 491.8
Grants 482.2 644.9 469.5 440.0 203.7
D. TOTAL RESOURCE INFLOWS 4,430.6 4,892.1 4,893.1 5,469.6 5,185.2
E. EXTERNAL DEBT REPAYMENTS

Amortisation

-215.4

-166.8
-143.7

-99.9
-159.5

-114.3
-152.9

-114.6
-152.1

-120.2
Exceptional Financing -44.9 -40.2 -32.0 -34.2 -32.0
Arrears -3.7 -3.6 -13.1 -4.1 0.0
F. DOMESTIC AND OTHER FINANCING 40.0 -423.4 32.3 -178.1 304.6
G. TOTAL RESOURCE 4,255.2 4,325.0 4,766.0 5,138.6 5,337.6
H. Interest Payments and Domestic Arrears
Interest 258.9 239.0 300.0 300.0 288.2
Domestic Interest 207.6 202.3 248.0 246.0 230.3
External Interest 51.3 36.8 52.0 54.0 57.9
Domestic Arrears 148.9 148.9 280.0 330.0 330.0
I. TOTAL AVAILABLE FOR MTEF 2,808.2 2,808.7 3,061.9 3,150.5 4,023.9
(Net of project support, interest payments and arrears) Source: Ministry of Finance, Planning and Economic Development
5.2.1 Revenue
Domestic revenue is projected to increase in each of the next three fiscal years. It is projected at U Shs. 3,059 billion in the FY 2007/8, which is a 15.3% increase on the current fiscal years projected outturn and amounts to 13.9% of market price GDP. It is expected to rise to U Shs. 3,420 billion, or 13.9% of GDP in 2008/09 and U Shs. 3,831 billion, or 14.0% of GDP in 2009/10. These projections exclude any new tax revenue measures for next fiscal year. If this money cannot be raised through new tax measures or if current revenue levels are jeopardized by tax rate reductions and/or tax incentives, then the budget resource envelope for the next fiscal year will have to be cut accordingly.
It should be noted that the growth in tax/GDP ratio is below the target except for FY 2009/10. This implies that, to achieve the annual revenue growth target of 0.5% of GDP, further revenues need to be raised through additional tax measures. However, there are limited tax handles to fill this gap - Government made important tax reforms in the last decade - introduction of VAT in 1996 and the overhaul of the income tax in 1997 in order to widen the tax base and make the tax system simple, equitable and competitive internationally. The international trade taxes were reformed with the establishment of the EAC Customs Union. Reforms have been undertaken to improve tax administration but the effects on revenue are not spontaneous.
5.2.2 Budget Support
Budget support in the form of grants and concessional loans is projected to be US$ 386 million, equivalent to U Shs. 711 billion, in the next fiscal year. Budget support is projected to decrease by about 3.5% in 2008/09 to US$ 373 million and then decline further to US$ 352 million in 2009/10. The decline in budget support in dollar terms is consistent with Government's drive to reduce donor dependence and the fiscal deficit as a percentage of GDP.
5.2.3 Project Support
Project support during next fiscal year is projected to be US$ 611 million, or U Shs. 1,124 billion, in the next fiscal year. It is projected to increase by about 20 % in FY 2008/09 to US$ 733 million before declining to US$ 372 million in FY 2009/10. The increase in project support over the next two years can be attributed to additional funding for infrastructural projects, most notably roads and energy.
5.2.4 Financing
External financing consists of amortization, exceptional financing and arrears payments. Amortization of external debt is projected at US$ 62 million, equivalent to U Shs. 114 billion in FY 2007/08, US$ 62 million or U Shs. 115 billion in FY 2008/09 and US$ 64 million or U Shs. 120 billion in FY 2009/10, while exceptional financing will roughly remain constant at US$ 17 million or U Shs. 32 billion over the next three years. Exceptional financing refers to money set aside to repay creditors whose debt is due but have not agreed to the HIPC repayment terms. External arrears payments in the next fiscal year are projected at US$ 7 million, equivalent to U Shs. 13 billion and they are projected to decline to US$ 2 million or U Shs. 4 billion during the FY2008/09.
Domestic financing is projected at a net Government borrowing from the banking system of U Shs. 32 billion in 2007/08, a net saving of U Shs. 178 billion in 2008/09 and a net borrowing of U Shs. 305 billion in 2009/10. Domestic arrears payments are projected at U Shs. 280 billion next fiscal year and thereafter increase to U Shs. 330 billion over the two following years.
5.2.5 Interest Payments
Interest payments on Government contracted debt are projected at U Shs. 300 billion next fiscal year, of which U Shs. 248 billion is interest on domestic securities (Treasury bills and Government bonds) while the rest is interest on external debt.
This overall figure represents an increase of 26 % over the projected outturn for this fiscal year, and constitutes 9 % of total resources available to the GoU budget. The figure is projected to remain broadly constant in shilling terms over the medium term, while falling slightly as a percentage of the resources available to Government (7 %) in 2009/10.
The high level of Government expenditure on interest payments, particularly domestic interest payments, is a consequence of the size of the Government's fiscal deficit, which has necessitated an increase in the number of Government securities issued by BolJ to control inflation. Government's policy of deficit reduction will help scale back interest costs in the medium term as can be seen by the declining share of interest payments as a percentage of the GoU budget.
5.3 Budget Outlook for FY 2007/08 and the Medium-term
Tax revenue outturn for FY 2006/07 is projected at U Shs. 2,555 billion. This represents a tax revenue/GDP ratio of 13.2%. Tax revenue is projected at U Shs. 2,961 billion on FY 2007/08, U Shs. 3,230 billion in FY 2008/09 and U Shs. 3,749 billion in FY 2009/10, representing tax revenue/GDP ratio of 13.4%, 13.1% and 13.7%, respectively. The projected tax revenue in the medium-term assumes stability in the tax system. This implies that Government must resist any pressures to destabilise the tax system. For instance, pressures to raise the PAYE threshold will result in a revenue loss of U Shs. 93 billion while pressures to provide additional tax incentives will also undermine tax revenue.
The total resources projected for Government expenditure, including interest and domestic arrears payments, in FY 2007/08 is U Shs. 4,766 billion. However, Government's domestic arrears payments of U Shs. 280 billion inevitably takes priority on the resources because these are commitments for which government has already consumed goods and services. Arrears payments also include retirement benefits (pensions) for senior citizens.
Consequently, when domestic arrears are deducted from the total resource envelope of U Shs. 4,766.0 billion, the amount available for expenditure next FY is U Sh.4,486.0 billion. This translates into an increase of U Shs. 379.7 billion above the FY 2006/07 expenditure of U Shs. 4,106.3 billion, an increase of approximately 9%.
Whereas the additional amount available for expenditure in FY 2007/08 is U Shs. 379.7 billion, the fact that donor project aid is earmarked for specific projects and that there is a projected increase in interest payment by UU Shs. 41.1bn compared to FY 2006/07 means that the net additional resources available for allocation to priorities next FY is only U Shs. 253.7 billion.
The options for Government to reallocate spending from within the budget to under-funded/unfunded priorities are severely limited. Currently 36% of the National Budget is financed with donor resources, a significant reduction from previous years. With the shift from project support to budget support donors require a number of benchmarks to be fulfilled before disbursing funds. As a result, Government has entered into a number of undertakings with donors that have budgetary implications. One such undertaking is to sustain the share of the PAF in the total budget. PAF currently accounts for 39.8% of the FY 2006/07 budget.
The option to finance additional expenditure requirements through cuts in the discretionary budget is limited due to the fact that the discretionary budget has been cut by 80% relative to the FY 2001/02 level. This leaves Government institutions that are highly dependent on the discretionary budget with a bare minimum of the resources they require. Therefore any further adjustments in these areas will be tantamount to closing down these affected institutions.
The option to increase revenue from external sources is also limited. Government aims to reduce aid dependency because high dependency increases the vulnerability of the budget to a sudden cut-back in donor aid thereby constraining economic and budgetary choices. In addition, developing a large deficit through external borrowing tends to appreciate the exchange rate, as more donor foreign exchange flows into the economy, and to raise interest rates, as the Bank of Uganda sells more treasury bills and bonds to ensure that the injection of donor-financed Government expenditure does not raise inflation. An appreciated exchange rate is damaging to export-led growth, as exporters receive fewer shillings for each dollar they earn. High interest rates are detrimental to private sector development as they raise the cost of doing business and reduce access to credit.
In view of this, there is need to agree on the feasibility of undertaking inter-sectoral budget re-allocations in favour of those sectors which can make the strongest contributions to tackling the core challenges of the budget strategy by consistently prioritising government expenditure on areas that clearly contribute to poverty eradication in a cost effective manner. In addition, it is clear that stakeholders need to identify key expenditure drivers in each of the critical expenditure priority areas. This will enable government to determine how the financial implications of these priorities impact on the rest of the sectors/sub-sectors in light of the projected MTEF.
The GOU Resource Envelope has increased by U Shs. 253.7 billion for FY 2007/O8 and the rationale underlying the FY 2007/08 Budget Strategy and Priorities are;
i. Interventions that will enhance economic growth and development;
ii. Measures that will increase production; productivity and value addition including micro finance.
iii. Measures that will enhance domestic and external competitiveness; and
iv. Public Sector interventions that deal with constraints to accelerate the socio-economic transformation of Uganda.
In addition, there are expenditures that disrupt the execution of the budget and must be provided for in FY 2007/08. These include additional expenditures under the Parliamentary Commission arising out of increased allowance rates and number of MPs, G-Tax compensation and CHOGM related activities.

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