Budget deficits and national debts in Uganda (1980-2020)
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Date
2023-05
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Publisher
Kampala International University, College of economics and management
Abstract
The purpose of the study was to assess the effect of budget deficits on national debts in Uganda 1980-2020. The objectives of the study was to establish the trend of budgets deficits and national debt, to examine the effect of budgets deficits on external debt and thirdly to examine the effect of budget deficits on domestic debt of Uganda from 1980-2020. The study was conducted based on a longitudinal research design were the data was collected based on 41 years. The study was conducted based on ex-post facto research design focusing on longitudinal design. The study was based on quantitative research for the assessment of the secondary data for scientific assessment and determining the conclusions for objectives. The data was analyzed using E-VIEWS to perform the Ordinary Least Squares regression in order to establish if the above variables significantly affect export growth rate as well as the other tests which precede regression analysis. The study findings show that budget deficits) is statistically significant at 10% level of significance in explaining variations in external debt in Uganda because their correlations 0.0795 for budget deficits. Secondly budget deficits is statistically significant at 10% level of significance in explaining variations in external debt in Uganda because their correlations 0.009 for budget deficits, the effect between the variables was positive meaning the increase in the budget deficits led to increase in the domestic debt of Uganda. The study further conclude that the state of the national debt is worrying, the overall debt that is generally domestic and external debt are currently at 40% of the GDP. Secondly the study concludes that increase in the budget deficits has a significant effect on the external debt. The study conclude that the continues increase in the budget (deficits) presents a high degree of influence into the national debt as the country will seek to highly attain the debts in order to support their activities. Thirdly, the studies conclude that budget deficits are statistically significant with domestic debt at 10% level of significance in explaining variations in external debt in Uganda because their correlations 0.009 for budget deficits. The budget deficits have made Uganda to high borrow internally in the country, the increase in the budget deficits has hence continued to lead to the increase of the national debt. The study recommends that for the country to curtail its deficits, the government must instead adopt a fiscal adjustment mechanism that increases revenue collection through an improved taxation system and raise domestic revenue mobilization rather than borrowing with high service rates to finance its budget deficits, secondly the study recommend for the need to reduce the dependence of the current account and government budget on oil export to reduce both deficits and government debt sustainability. To achieve this goal the government could gradually replace oil with non-oil exports and tax revenues. Thirdly the study recommend that there is need for boosting production and export base; there is also need for government to pursue policies that will boost the production goods for both domestic consumption and export in the long run.
Description
A research dissertation submitted to the college of economics and management in partial fulfillment of the requirements for the award of Master of Arts of economic policy and planning in Kampala International University
Keywords
Budget, Deficits, National debts, Uganda