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Donors cut all direct aid to government until 2015

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Government will have to tighten its financial belt significantly after donors announced deeper and longer aid cuts yesterday in response to massive public corruption. The European Union ambassador to Uganda announced yesterday that the EU, United Kingdom, the World Bank, Austria and other countries had suspended up to $300 million promised in budget support each year, up to 2013.

Other countries that have cut budget support include Belgium, Germany, Ireland and Sweden. “Ugandan citizens are going to lose close to $300 million in budget support from all the eight development partners,” Ambassador Roberto Ridolfi said yesterday. “Though the suspension is not going to affect running programmes, it will impact highly on the lives of the citizens.”

The Shs750 billion in aid cuts is about as much as government planned to spend on agriculture, water and environment in the current financial year. Sweden and Ireland had earlier suspended their project support and thus the new agreement suspends all their funds to Uganda while Norway withdrew all its support in 2011.

Speaking at an anti-corruption convention in Kampala, Ambassador Ridolfi said yesterday that although corruption in Uganda was nothing new, the extent of the problem discovered in the Office of the Prime Minister revealed a disappointing absence of financial controls. “How can I now go back to Europe and ask for aid for Uganda?” Mr Ridolfi asked. “The recent corruption scandals are a breach of trust between the country and its development partners.”

This newspaper has learnt that more than eight development partners met last week and agreed in their assessment that government lacks the ability to fight public corruption. It informed the decision to suspend aid until 2013. “I believe this will give government enough time to lay down frameworks to control financial resources. It is upon government to now move to re-allocate the budget without making the situation worse for the common man,” Mr Ridolfi said.

In October, Sweden and Ireland suspended project support aid to Uganda over alleged corruption in the OPM and sent a team to investigate the matter. The move followed a draft report by Auditor General John Muwanga, which found that at least Shs50 billion in aid from Ireland, Norway, Sweden and Denmark had been misused.

The Auditor General’s inquiry was prompted by investigations by this newspaper, which broke the story of the graft in the OPM. The Public Accounts Committee of Parliament is currently investigating the matter based on the findings in the Auditor General’s report. A separate investigation by the Criminal Investigations and Intelligence Directorate of police is also underway.

Meanwhile, a day after Germany’s Envoy to Uganda Ambassador Klaus Dieter Düxmann said his country had not suspended Aid to Uganda, his embassy yesterday sent communication to the contrary, officially announcing the suspension of three million Euros in budget support to Uganda.
Between 2010 and 2013, Germany had committed 120 million Euros to Uganda, 24 million Euros of which had been allocated to budget support.

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