Document Title: National Budget, reasons for budget cuts, improving budgeting

Paper code: 13030

National Budget, reasons for budget cuts, improving budgeting

a)

Indeed, Government of Uganda made extensive cuts of budgets from its ministries, department and agencies (MDA) to redirect finances to major priorities in the current financial year 2021/2022. The across-the-board cut back, totaled Shs203.4 billion, which has had effect affect universities, parastatals and various commissions of government in total 106 entities. There were a number of reasons for which the budget was planned and later reviewed for financial year 2021/2022.

To begin with, the annual budget is a form of plan, which sets out a programmes of projected government expenditure geared towards achieving some policy targets (Afonso, 2021). Such targets would be within the confines of some available policy instruments and assumptions regarding projected revenue.  Therefore, one can say, a budget of any government is the technical instrument by which commitment are translated into monetary terms. The budget is a key instrument for macroeconomic management in most economy and its efficacy determine the success of governments in meeting solid goals.

With the outbreak of covid-19 early 2021, the pandemic which has slowed economic activity. Real gross domestic product (GDP) growth fell to 2.9% in FY20, from 6.8% in FY19 as major trade partners faced a recession, travel restrictions choked the tourism industry, and the sharp decline in world oil prices stifled foreign direct investment inflows (World Bank, 2020). More so, the recession abroad and loss of employment reduced remittance inflows. A situation that could call for budget cutting on the side of government of Uganda to meet the set annual goals.