by Ssekandi Ronald, Chen Cailin     

    KAMPALA, June 9 (Xinhuanet) -- Ugandan President Yoweri Museveni has described the country's national budget presented on Wednesday as "poor man's budget," saying the poor stand to benefit from the budget as the country strives to reduce the poverty levels.

    "The 2005/06 budget is to increase production of goods and services so that the people's average standards of living improves rapidly and poverty reduces," said Museveni soon after the national budget was presented to parliament.

    The country's Finance Minister Ezra Suruma said while presenting the budget that although major progress has been achieved in the reduction of poverty on the long-term basis, from 56 percent in 1992/93 to 35 percent 1999/2000, the proportion of the people living below the poverty line has recently increased to 38 percent.

    It is on this basis that the government of Uganda has zeroed in on the core challenge of reducing the now increasing poverty levels.

    Suruma announced that the government has now embarked on a program to mobilize the rural population to participate in micro finance institutions as shareholders, depositors and borrowers. This program to transform subsistence wealth into monetary wealth will substantially increase the volume of trade, monetary savings as well as credit particularly in the rural areas where banking facilities are few.

    According to Suruma, the government will build on these effortsto ensure that there is a micro finance institution in every sub county within 3 years and eventually every parish.

    The government has also announced plans of increasing employment as a measure of reducing the poverty levels in the financial year 2005/06. Recent statistics from the Uganda Bureau of Statistics indicated that the highest relative unemployment rates were observed in the younger age groups with a peak in the 20-29 age bracket at 5.5 percent. Unemployment was also higher in urban areas at 12 percent as compared to 1.7 percent in rural areas.

    To respond to this challenge, the government has started up a Rural Development Strategy. In the strategy, the government will start leasing its land in parcels of economic size to Ugandans, especially the youth, who wish to make a start in organized agriculture with provisions of mechanization, irrigation, extension and marketing services. The government will also extend assistance to farmers so that they too can participate in production for companies engaged in processing of rice, sugar cane,oil seeds, sorghum, cassava and bananas.

    In a bid to further reduce poverty, the government has also increased funds going to the agricultural sector. Agriculture is Uganda's major economic activity and about 80 percent of the labor force in the country is employed in the agricultural sector.

    According to the 2005/06 budget the government has provided 148.9 billion shillings (83 million US dollars) to the agricultural sector, up from 115.6 billion shillings (64 million dollars), representing a 29 percent increase.

    Suruma said that on top of the increase in funding, the government will intensify provision of appropriate technologies and input kits including fertilizers, improved seed, pesticides and herbicides and cooperative savings. This increased funding is expected to raise productivity.

    However, as the government strives to reduce poverty especially in the rural areas there are some key issues that have to be resolved.

    In its budget the government announced new tax increment on some products which are essential to the poor, such as fuel, diesel and petrol. These are key to the poor because it will be expensive for them to transport their goods to the markets. The farmers are already complaining of the high price of fuel. Now with this new increment it will be more difficult for them to transport their goods.

    The government has also increased the Value Added Tax from 17 percent to 18 percent. The increment may be small but it is going to bite hard on the poor. This increment means that the prices of most commodities in the country are going to go up.

    Finance Minister Suruma admitted that increment is a pinch. "Taxation is the only practical means of raising revenue to finance government spending on the goods and services most of us demand," said Suruma.

    The micro finance institutions that the government is advocating for are also charging high interest on loans, which tend to discourage the farmers from borrowing.

    The war in northern Uganda that has been raging on for the last19 years also needs to addressed, which has cost the east African country millions of dollars, stalling development in other sectors.

    In recent years, the government had to cut 23 percent of ministry budgets to help fight the war in northern Uganda. This means that the war consumes a big chunk of funds that would have been used to develop the country.

    Northern Uganda is the poorest region in the country. Currentlyover 1.4 million people have been displaced from their homes because of the war and they now depend on food handouts from humanitarian agencies. Enditem