Uganda says confident of renewed aid
2013-01-11 21:31
Kampala - Uganda expects foreign donors to restore aid which
makes up a quarter of its budget after the government pledged to refund stolen
and embezzled funds and to prevent future pilferage, it said on Friday.
Major western donors including Britain, Uganda's biggest
bilateral source of aid, suspended their financial support to the east African
country toward the end of last year after allegations $13m worth of aid had
been embezzled.
The money was meant for financing reconstruction projects in
the north and north-eastern parts of the country, ravaged by years of a
rebellion by the Lords Resistance Army.
"We're confident that with all the measures we've taken
donor disbursements will resume in the second half of this year," Keith
Muhakanizi, deputy secretary at Ministry of Finance told a news conference,
referring to the fiscal year that ends on June 30.
"We're fully engaged with donors on a day-to-day basis
and our reforms will trigger release of [aid] funds."
Renewed aid would support the shilling currency which hit a
14-month low last week. The Ugandan economy depends heavily on the donations as
a source of foreign currency.
Muhakanizi said the government had started removing
loopholes in public finance laws that encouraged fraud, conducting special
audits in six big-spending ministries and freezing assets of officials accused
of embezzling funds.
Strained relations
The government has previously said the cuts would leave it
about $260m short of the money it needs to cover planned 2012/2013 spending.
The central bank says the aid freeze will shave 0.7% off Uganda's economic
growth.
Last month, ratings agency Standard and Poor's affirmed its
B+ and B long- and short-term sovereign credit ratings respectively for Uganda
but downgraded the country's outlook to negative from stable, citing strained
relations with donors.
Uganda has reimbursed Ireland $5.3m worth of stolen aid and
Muhakanizi said a total of $14.2m had been raised through a supplementary
budget to refund all donors who alleged their aid was embezzled.
Angelo Izama, a Ugandan analyst at the US-based Open Society
Foundation, described the idea of using taxpayer money to refund stolen aid as
"bizarre" since it was not taxpayers who had embezzled the aid.
"Secondly, since the government can quickly marshal all
this money to pay donors, the implication is that government has money and
actually doesn't need aid," he said.
Officials say the money will be taken directly from
government funds.
