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Donors slash Ugandan budget support over graft - budget paper

Source: Reuters - Mon, 22 Apr 2013 11:39 GMT
Author: Reuters
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KAMPALA, April 22 (Reuters) - Uganda's direct budget support will fall 93 percent to 50 billion Shillings ($19.6 million) in the 2013/2014 fiscal year as donors withdraw funds due to concerns about government corruption, according to a finance ministry budget paper.

Even so, economic growth is projected to accelerate to 5.6 percent next fiscal year from an estimated 4.1 percent this fiscal year ending June 30, said the Budget Framework Paper (BFP) seen by Reuters on Monday.

"The drastic decline is as a result of withdrawal of budget support by some donor countries as a result of financial management and governance issues in a number of Government departments," the BFP said.

The BFP, which sets out Uganda's medium term fiscal policy framework and strategy, says Uganda's external budget support will be cut from 749 billion shillings in this fiscal year to about 50 billion shillings next year.

The finance ministry said borrowing from the domestic debt market to plug the gap "may not be appropriate" for Uganda given its interest bill is already high.

Instead, it said it would raise taxes on fuel, telecoms and mobile money transactions services to raise extra domestic revenues worth about 383 billion shillings.

Development partners finance around 25 percent of Uganda's 2012/13 budget, though this includes loans and project financing as well as direct budget support.

($1 = 2555.0000 Ugandan shillings) (Reporting by Elias Biryabarema; Writing by Drazen Jorgic; Editing by Richard Lough, Ron Askew)

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