1. Making Budget Reform Matter for Poverty Reduction
Progress in implementing Uganda’s PRS
Paul Mpuga
April 27, 2006

2. 1. Outline
Pre-1986 Uganda
: Economic stabilization, institutional & infrastructure rebuilding
: Focus on poverty, service delivery
The National Budget, dialogue, PAF
Challenges
Conclusion

3. 2. Background Pre-’86 – failed state, no rule of law
Breakdown of infrastructure/instns
GDP decline by 2.7% p.a.
3-digit inflation
Government control &active in most sectors
National budget tool for implementing controls

4. 3. 1987-97: Stabilisation/reform
Wide spread poverty –UNHS1 56% (North 71%) [now 38%, 63%]
Net prim sch enrolment 62% [84]; adult HIV prevalence 18% [6-7]; access to safe water 25% [55].
Life expectancy 48 yrs [44], stunting (<5yrs) 45%
Initial reforms
ERP -May 1987, currency revaluation
Fiscal reforms; major civil service reforms
Decentralisation (pilot in ‘93)

5. Reforms Deepening and institutionalisation of reforms
Financial sector reforms (FIS ‘93)
Forex/interest rate, current a/c liberalisation ‘94
Marketing liberalisation/dismantling of GoU monopolies – CMB, LMB, F&B …
Promoting investment, - Privatisation, UIA
Fiscal management - URA

6. 4. 1997-04: Poverty/services delivery
PEAP ’97 - [target reduce pov to 10% by 2017],
1st rev 2000, 2nd PEAP summary used as PRSP
UPE, public service reform, health user fees
Focus on good governance/security
Provides framework for public policy action.
Guides medium term sectoral plans, district plans, national budget process & public investment progs
To monitor progress GoU produces a Poverty Status Report every two years.

7. 5. 2004 –: Back to growth PEAP revised 2003/4 - 5 pillars –
Economic management;
Production, competitiveness and incomes - pro-poor growth, MSMEs, agric/rural devt;
Security, conflict resoln & disaster mgt - Northern Uganda recovery process
Governance; and
Human development

8. 6. The national budget & poverty focus
Budget Act 2001 outlines process and stakeholder participation
Process largely open &transparent, spending units -CG/LGs, DPs, civil society involved.
Increased oversight role by Parliament
SWGs active in budget dialogue
PAF (intro in 1997/8) to protect poverty reducing expenditures from cuts
PAF as share of GoU expenditures has been growing (17% in FY98, 37% FY05), as well as candidates for PAF!

9. National budget Cap on supplementary budget at 3% of original budget.
Supplementary bgts need approval of Parliament
Public Finance &Accountability Act, and Procurement Act, 2003 helping to improve transparency/accountability of public spending
Annual sector reviews helping to monitor progress.
PEAP matrix to be used by all DPs.
Planned PEAP implementation review will provide key evidence on indicators and improve link to budget.
Gender budgeting guidelines to improve allocations

10. 7. Challenges
Increased Y poverty: ‘ % to 38% ’03 [UNHS3 underway!].
Inequality: Gini cf ↑ from 0.38 to 0.43.

11. Challenges Growth of GDP 4.9 – target 7%
Inflation –within target, but volatile, driven by agric!
Exchange rate volatility
Growth of exports low – 4.4% and trade policy not well coordinated
Large trade deficit
Energy/infrastructure gaps

12. Challenges Translating PEAP priorities into MTEF
Resource constraints – MTEF ceilings.
Needs galore! Services, infrastructure, energy, defense, PA, …
Transparency and efficiency, VfM
Low LE, infant/maternal mortality high
Access, & quality of public services
High population growth/high fertility rates
Policy interventions – G-tax, LGs, RDS!

13. 9. Conclusion Uganda has been at the centre of reforms
Great strides in reducing poverty &improving service delivery
PEAP has provided key link to budget
Budget reforms and inclusion key in improving allocations.
Quality, value-for-money still an issue
Ad hoc interventions disrupting policy/sector performance