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Reforms to Bring Aid on Budget: Case of Uganda

Presentation at The CABRI-Rwanda Aid on Budget Workshop by Mbulamuko Laban MFPED-UGANDA, focused on criteria, challenges, status, and a way forward for integrating aid into Uganda's budget system to enhance fiscal discipline and transparency.

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Reforms to Bring Aid on Budget: Case of Uganda

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  1. REFORMS TO BRING AID ON BUDGET- CASE OF UGANDAPresentation at The CABRI-Rwanda Aid on Budget WorkshopbyMbulamuko LabanMFPED-UGANDAAt Kivu Sun Serena – Gisenyi Rwanda6-10th October 2008

  2. Structure of Presentation • Introduction • Rationale • Criteria for Putting Aid on the Budget • Budget Rules • Status • Challenges • Way forward • Conclusion.

  3. Introduction • GoU is striving to improve Planning and budgeting. • Starting FY 2005/06 donor projects were integrated into the MTEF. • Weaknesses prior to integration: • External projects were not being subjected to a hard budget constraint • Ineffective prioritization of external project expenditure • Future recurrent cost implications of donor projects were not properly evaluated.

  4. Criteria for Putting aid on Budget • Legal requirement (PFAA 2003 and Budget Act 2001 for all aid flows into the Consolidated Fund or special accounts approved by Parliament. • Acquisition of Loans requires Parliamentary approval and MOFPED presents annually to Parliament a statement on the Status of Loans and grants. • Specifically Donor funded projects should be consistent with: • Budget strategy- Investment rather than consumptive expenditure • Overall Planning Framework _ PEAP or NDP in preparation • Debt Strategy- borrow on concessional terms (IDA comparable) for debt sustainability, aid cap (depends), and for investment

  5. Criteria Con’t • MFPED annually requests Donors to indicate the planned disbursement as well as new projects in the pipeline. This forms basis of the Fiscal framework as well as the MTEF captured in the NBFP; and Budget Speech and Estimates of Revenue and expenditure presented to Parliament by 1st of April and by15th June every year. • As part of the Budget process Sector/ Spending agencies are required to confirm the accuracy of this information. They thus reflect this funding in their BFPs and Ministerial Policy Statements.

  6. Budget Rules • All New projects have to be approved by SWG • Ensure projects reflect sector priorities • Projects for the next FY must be approved by the Development Committee by 31st December • Fiscal discipline - expenditures must be within overall MTEF ceilings. • Project accounts are opened with consent of the Accountant General and all requisitions for disbursement are channeled through that Office. • All Expenditures must be approved by Parliament or else excess expenditure is queried by Auditor General.

  7. Role of Development Partners • Commitment of Partners to: • Fully disclosing their support to the various sectors. • Aligning their programming cycles to Government Budget cycle • Providing full and timely information on their annual and rolling 3-5 year plans • Timely disbursement of resources as programmed in the MTFF.

  8. Current Status GOU and Development Partners agreed on the partnership principles that guided aid flows since 2003. Project support to Central Government has been integrated into the MTEF ceilings based on sectoral priorities. Majority of Central Government Project accounts have been transferred to the Central Bank. The Uganda Joint Assistance Strategy (UJAS), has been agreed to by twelve of Uganda’s major development partners. Discussions are ongoing on Division of labour based on comparative advantage of the respective donors.

  9. Challenges No unified mechanism in place to capture donor disbursements especially grants thus issues of comprehensiveness. Sectors approach donors directly to solicit for resources and use donor conditionalties to jerk up their ceilings. Increased donor inflows viz a viz macro economic stability. Not all project accounts have been transferred to BOU Many donors are unable to provide outer year projections and still provide off budget assistance to sectors.

  10. Way forward • Donors and Gou should: • enhance the mechanism for providing/ capturing accurate and comprehensive information on Donor Aid. • uphold the aid management procedures of the recipient countries so as to minimize off budget resource flows, improve strategic resource allocation as well as aid effectiveness. • expedite the operationalisation of the JBSO instrument and actualise the division of labour.

  11. Conclusion • Bringing the full extent of Aid flows on the Budget enhances: • fiscal discipline, strategic resource allocation, efficiency and effectiveness of the budget and thus is the way to go for all governments. • transparency and accountability on the side of the executive and the over sight function of the legislature.

  12. End Thank You!

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