IMF to govt: Don’t borrow for defence spending

Kampala. The International Monetary Fund senior representative, Ms Ana Lucia Coronel, has cautioned the government not to overshoot its defence budget because this would prompt borrowing.

Speaking at the post-budget breakfast meeting in Kampala on Friday, Ms Coronel said increased expenditure on defence, though at times justified, could drive the government into borrowing, which would escalate the country’s debt burden and hurt other sectors of the economy.

“Increase on security expenditure is important but it could lead the government into more domestic borrowing,” Ms Coronel said. She was analysing the national Budget read on Thursday by the Finance Minister, Maria Kiwanuka.

“This budget, if followed, will normalise domestic borrowing. So it is important that defence expenditure is within the budget,” she added.

Special budget for defenceTalking to Sunday Monitor on the sidelines of the breakfast meeting, Ms Coronel reiterated her stand against any borrowing for defence expenditure from the domestic market.“Instead there should be a budget for defence—which shouldn’t be borrowed,” she said.

In her Budget speech, Ms Kiwanuka said defence and security matters cannot be compromised because they are crucial for national stability, and a major ingredient in enhancing trade and investment, without which the economy could collapse.

Ms Kiwanuka said government continues to strengthen the armed forces and other security agencies through acquisition of modern security equipment, improvement of staff welfare and training, among others.

“In order to facilitate the government programme of professionalisation and equipping the security agencies, Shs1 trillion has been allocated to the security sector in the FY 201415, representing 7.1 per cent of the total budget,” she said.

Need for spending disciplineIn an earlier interview, Secretary to the Treasury Keith Muhakanizi told NTV, Daily Monitor sister company, that there was need for more discipline in adhering to the budgets. He said several supplementary budgets, some of which are for defence activities, should be minimised or even avoided.

The situationThe debt. The government borrowed nearly Shs1 trillion shillings to carry through this financial year ending June 30.

SOURCE: Daily Monitor

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