European Union Cuts Uganda Budget Support Over Slow Progress on Corruption

The “implementation of some reforms aimed at increasing transparency and value for money in the use of public funds have lagged,” the EU said in a statement handed to reporters today in the capital, Kampala.

The EU will provide 23 million euros to the country in the fiscal year through June 2011, it said. The funds are the second portion of a 175 million-euro program that began in 2008-09 and will end in 2013-14, it said. The first portion of 30 million euros was released in June 2009.

The EU will work with Uganda “to address concerns relating to procurement and corruption” and supports the country’s plans to recover funds lost through corruption in 2007, when Uganda hosted the Commonwealth Heads of Government Meeting, it said. The plan involves sanctioning corrupt officials as well as starting criminal investigations against them.

The government plans to increase spending by 3 percent to 7.55 trillion shillings ($3.41 billion) in the fiscal year that began July 1. At least 75 percent will be raised through domestic taxes and the rest through foreign loans and grants, Finance Minister Syda Bbumba said on June 10.

Donor aid to finance the budget is expected to decline this year from 26 percent in 2009-10, this year, the minister said.

Uganda, with a population of more than 30 million people and an economy of $16.4 billion, will become an oil producer later this year when Tullow Oil Plc starts production at its Kasamene field.