World Bank Cuts Budget Support To Uganda

The World Bank has suspended budget support to Uganda over reasons yet to be established. The Bank has also indicated that further financial support to the country would be towards specific investments.

Bank of Uganda Governor Tumusiime Mutebile
Bank of Uganda Governor Tumusiime Mutebile confirmed the development

Budget support is a method of financing a country’s budget through a transfer of resources from an external financing agency to the recipient government’s national treasury. It was not immediately possible to establish reasons for the suspension of budget support to the country.

On Friday, Emmanuel Tumusiime Mutebile, the Governor of Bank of Uganda confirmed that the World Bank had suspended budget support, which is one of the various lending instruments the Bank uses. He however maintained that the World Bank was still interested in further support to the country.

Mutebile also declined to state how the suspension of the budget support would impact on the country.

A statement from the World Bank office in Uganda says that the Bank is still committed to supporting Uganda’s development priorities but adds that the Ugandan government has requested for a shift from general budget support to specific investments for infrastructure, agriculture and skills development.

It’s reported that the World Bank advanced a loan of $235 million to Uganda in 2012, $345 million in 2011 and $457.6 million in 2010.

Rashit Pertev, a Senior Agricultural Economist recently said that the Bank was waiting on government to clearly state its policy on agricultural extension. He emphasized that the bank would not provide funding for centralised agricultural extension and advisory services.

The preference to channel funding for specific investments as opposed to budget support comes in the wake of reported theft of billions of donor funding towards budget support. In one such case, the Auditor General released a report late last year indicating that up to 50 billion shillings was mismanaged by staff in the Office of the Prime Minister. The revelation forced some donor countries to suspend aid to Uganda.

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