REFORMS TO BRING AID ON BUDGET CASE OF UGANDA Presentation at The CABRIRwanda Aid on Budget Workshop

1
REFORMS TO BRING AID ON BUDGET- CASE OF UGANDA
Presentation 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 Cont

• 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 Ugandas 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!