By Ben Ssebuguzi
As we prepare to read the budget for FY 2023/2024, where the limited resources are going to be channeled towards of improving the welfare of Ugandans through knowledge and education,among others. The government through the top economist,PSMF Ramathan Goobi has already assured us that there will be no external borrowing,which is a big signal that government is ready to battle inflation.
In 2009 during the global Economic crisis,leaders of the G20 used the fiscal policy to mitigate the impact of the crisis just like the one we have as a result of
covid 19.
During such economic times, government use a proactive approach and not laissez-faire where just seat back and market forces take a lead !! This is done to promote strong and sustainable growth.This also helps to jump-start growth after covid and mitigate the impact of the crisis on vulnerable groups like the poor hence reduces income inequality. Borrowing inside will reduce interest payments in dollars which reduces our foreign exchange reserves.
*How does government use fiscal contraction /fiscal tools to rectify the economy?*
Here,economic policy makers from Ministry of Finance,will change the level and types of taxes through fiscal policy,tight budget spending:and probably that is why there many budget cuts to government departments as a conservative measure.
Additionally, government will use bank of Uganda as monetary tool through increasing interest rates,bank reserve requirements and selling of government securities and foreign exchange.If we don’t manage inflation, instead inflex will counter production due to high cost of doing business and hence lower the rate of job creation.
In conclusion,we have to bear the short term pain in order to attain long term benefits by fighting the white elephant called INFLATION in order to attain higher economic growth and return to pre- covid economic stability. We thank the Office of the National Chairman managed by Hon. Hadija Namyalo Uzeiye for the task of mobilising the youths to create wealth and jobs and hence be able to prevail over the blunt of inflation.This is in line with the NRM manifesto for 2021-26.Thank you General Yoweri Kaguta Museven for empowering this office for youths to engage in production.
*This article is written in memory of the late Kenneth Muhakanizi who championed macro and micro economic stability at Finance ministry as PS* #RIP
Ben Ssebuguzi is the Head of Research Office of the National Chairman ,Kyambogo.
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