Effect of government spending on economic growth (focuses on agricultural sector) in Uganda (2016-2019)

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Kampala International University, College of Economics and Management
The study was set to investigate the effect of Public spending on Economic growth focusing on agricultural sector and it was guided by the following objectives; The main purpose of the study was establishing the impact of government spending on economic growth focusing on Agricultural sector in Uganda, to determine the effect of public expenditure on economic growth in Uganda, to establish the short run and long run relationship between public spending and economic growth, to analyze the direction of causality between public expenditure and economic growth in Uganda. Data were collected from different authorized sources and analyzed using SPSS and excel. According to the findings of the study. It was indicated that the state of the agricultural sector in Uganda during 2017-2018 paints a discouraging picture with regard to contribution to GDP and the rate of growth as these have significantly declined. The findings also indicated that the main driver of Uganda’s low expenditures is its low intake of domestic revenue. In fact, its tax to GDP ratio, which was 11.6% of GDP in 2012/13 is one of the lowest in the world. The findings also indicate that fiscal policy is the key to success and much effort has, in the past decade, gone towards fiscal reforms and the improvement of institutional capacities. It was indicated that public spending contributes much to the GDP growth rates. The following policy measures have been identified to address the current economic conditions and undertake measures to rebound the economy in FY 2017/18; Counterpart funds will have a first call on any identified additional resources and ring fenced for Development Projects to avoid delays in project implementation for all approved projects, eliminate domestic arrears by prioritizing them on sector MTEF allocations to ensure that service providers are paid in time. Accounting Officers who continue to accumulate domestic arrears will be held personally responsible, Review of tax exemptions, Given the limited revenue options and demand to raise revenues, there is no scope for tax rate reductions or increases this is a disincentive to investors, Renegotiate tax treaties to limit base erosion and profit shifting by multinationals and limit treaty abuse In the recommendations, key role for government is to improve the quality and access to education and health services and the maintenance of existing public infrastructure.
A Research Report Presented to the College of Economics and Management in Partial Fulfillment for the Award of Bachelors Degree of arts in Economics of Kampala International University
Government spending, Economic growth, Agricultural sector, Uganda