By Julius Mugaga Tukacungurwa/Umoja Standard.
Kampala, Uganda: On Sunday, Uganda based Civil Society Organizations (CSOs) convened at Civil Society Budget Advocacy Group (CSBAG) headquarters in Kampala to give their insights regarding World Bank suspension of loans to Uganda and likekely effecet on Uganda’s economy. They warned the likelihood of tough situation ahead should government fail to take affirmative action following the decision.
In its sense, this is likely to cripple the economy as world bank has been funding many projects worth trillions. Short of effective action, this may spark untold poverty, social sector financing reduction, increase in loans due to domestic commercial borrowing that comes with high interest rates and effect on tax collection.
This comes after State Minister for Finance, Hon. Henry Musasizi informed the country on friday that they are engaging the World Bank on its decision to cut financing of projects in Uganda citing that it will have dire consequences on the operations of the government but assured that they are still gathering ideas about what to do in line with adjusting the budget.
“We are negotiating with the World Bank but should we fail to agree, then we shall make some decisions on the budget which we shall bring to the attention of Parliament for approval,” Minister said.
At a press conference, Julius Mukunda, the Executive Director of CSBAG said that World Bank controbuted 18% of the country’s budget therefore its withdrawal means that government may be forced to cut its unnecessary expenditures to avoid a great pinch and safeguarding Vision 2040 as well Sustainable Development Goals (SDGs).
It should be noted that the Bank has over time financed Uganda’s development agenda with more than 30 projects ongoing and about 13 in pipeline amounting to UGX51trillion (USD 13.9bn) that may be fall short of their glory.
“Freezing of funding by the World Bank may lead to a substantial withdrawal of dollars from the Ugandan market which as of June 2023, the Bank of Uganda held gross Forex exchange reserves of $4,074.6 million USD. We therefore call on Government to reduce public administration costs and other extravagant expenditures in response to the WB decision.” Said Mukunda.
“We reiterate our call for Government to re-examine its spending patterns with the main objective of further cutting down public administration costs through; reviewing the public salary structures, rationalising government ministries and agencies, reducing local government administration units and staff on contracts,” He added.
Speaking at the same event, Ms. Angella Kasule Nabwowe, the Acting Executive Director of the Initiative for Social and Economic Rights (ISER) cited that WB decision may derange education sector citing among others, the 200 approved SEED Schools for construction which have not received funding yet and may meet their premature death. In that regard, Angella advocated for an affirmative action by the government to resist the likely crisis.
“We know that Uganda is one of the countries that were affected by COVID in terms education sector. The likelihood of halt of the specific loan of $300m aimed at increasing traditional schools is going to affect public schools,” Ms. Nabwowe said.
In the same manner, Mr. Gilbert Musinguzi, an official from Uganda Debt Network (UDN), cautioned government to interest itself in rationalizing various state agencies through ploughing them back to their parent ministries to save funds for priority sectors. He sought for intensified fight against corruption within public entities, to help Ugandans realize Vision 2040, he too advised for a dialogue between the World Bank and the Government to have the freezing of funds halted.
“We are hopeful that dialogue between the Government of Uganda and the World Bank could lead to a reconsideration of the funding suspension,” Musinguzi said.
And for Jonas Mbabazi Musinga, a Research Fellow at Advocates Coalition for Development and Environment (ACODE) cited that the funding suspension could worsen the poverty level in the country, particularly among women, children, and young people who comprise the majority of Uganda’s population.
“The likelihood of an increase in domestic borrowing by Gov’t is going to affect access to financing by the private sector; we will not create more jobs and fewer taxes will be created,” Mr. Musinga said.
He, therefore, suggested that the government should curtail expenses related to conferences, workshops, and large fleets of cars used by ministers and other public servants.