Government Domestic Arrears at UGX2.7 Trillion – Bahati

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In short
The arrears are mainly due to supply of goods and services, court awards, salaries and pensions, according to Bahati.

The government is drowning in arrears totaling 2.7 trillion Shillings according to the State Minister of Finance in charge of planning. Bahati says they are working on a strategy to reduce the domestic arrears.

Basing on figures in the Auditor General's report for the year ended 30th June 2016, the Budget Committee said that domestic arrears had continued to escalate at 62 percent from 1.39 trillion Shillings to 2.25 trillion Shillings. The figure has since increased to 2.7 trillion Shillings.

Government has allocated 110 billion Shillings in the financial year 2017/18 budget estimates, to clear part of the bill. The arrears are mainly due to supply of goods and services, court awards, salaries and pensions, according to Bahati.

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In 2016, several businesses approached the government for bailouts in trillions of Shillings claiming they were on the verge of going belly up. Some of the businesses genuinely had arrears with the government for supplied goods and services.

The move faced stiff resistance and condemnation from the public prompting the government to go mute, although reports suggest a few businesses were indeed helped.

 Bahati says the government is aware and concerned that the arrears are a wet blanket on doing business, adding that in fiscal year 2017/18 government is appropriating 300 billion Shillings to clear domestic arrears.
 
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Minister Bahati says the domestic arrears have also bulged because of contracts in foreign currency. Henceforth, says the minister, new contracts will be in Uganda Shillings.
 
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The Ministry of Finance Permanent Secretary, Keith Muhakanizi, told a recent high level dialogue on the 2017/18 budget that the domestic arrears date back to the 1960s and are due to actions that could have been avoided seizing property, inability to pay debts even if the means is there and ignoring court decisions, among others.
 
Muhakanizi, who recently narrowly missed arrest for not honoring payment of arrears, said government technocrats should pull up their socks in order to not pile up arrears that are avoidable.
 
The PS has persistently said the government should avoid piling arrears and debts in order to avoid a debt crisis, a situation with adverse effects.

 

About the author

David Rupiny
In his own words, David Rupiny says, "I am literally a self-trained journalist with over 12 years of experience. Add the formative, student days then I can trace my journalism roots to 1988 when as a fresher in Ordinary Level I used to report for The Giraffe News at St Aloysius College Nyapea in northern Uganda.


In addition to URN for which I have worked for five years now, I have had stints at Radio Paidha, Radio Pacis, Nile FM and KFM. I have also contributed stories for The Crusader, The New Vision and The Monitor. I have also been a contributor for international news organisations like the BBC and Institute for War and Peace Reporting. I am also a local stringer for Radio Netherlands Worldwide.


I am also a media entrepreneur. I founded The West Niler newspaper and now runs Rainbow Media Corporation (Rainbow Radio 88.2 FM in Nebbi). My areas of interest are conflict and peacebuilding, business, climate change, health and children and young people, among others."