Civil Society Organizations under their umbrella, the Civil Society Budget Advocacy Group (CSBAG) says that World Bank’s move to suspend funding to Uganda has far-reaching consequences on the realisation of Uganda’s Vision 2040 and achievement of the Sustainable Development Goals by 2030, which is just 7 years from now.
CSBAG boss Julius Mukunda revealed that besides loans, Uganda also receives grants from World Bank and by 21st December 2022, Uganda had received grants amounting to USD 204.6 million2, of which, the largest share of up to 85% was for Human Capital Development where education, health, water, and sanitation fall and therefore all these sectors will be hit had if the suspension is implemented.
By 31st December 2022, the World Bank (IDA) undisbursed debt stock, which was the largest of the total undisbursed debt stock of USD 4.81 billion, stood at USD 0.9139 billion (29%). This was followed by IMF with 16%, AFDB with 14%, IDB with 10% and others.
”We note that this decision by the World Bank, being a major development funding partner might induce other development partners especially from the OECD countries to follow suit. In this regard, a lot of uncertainty lingers as to whether the IMF will take a similar decision being the other Bretton Woods Institution apart from the World Bank. Uncertainty is never good for business and economic growth projections,” noted Mukunda.
He said the suspension comes with a couple of complications among them including the reduced financing in social sectors, increased pressure for commercial loans and domestic borrowing and effect on Uganda’s foreign exchange stability, worsen foreign direct investments.
CSBAG asked governemnt to reduce its spending patterns with main objective of further cutting down on its public administration costs and enhance fiscal discipline.
”This is the time for Accounting Officers to walk the talk of minimizing wastage and misuse of public resources, which is the norm especially in public procurement, poor project management among others. In his findings of the financial year 2021/22, the Auditor General’s established that Government of Uganda lost close to UGX 2.20468 trillion due to public procurement irregularities, UGX.0.863bn due to commitment fees paid on undisbursed loans, and UGX.3.357 bn due to interest payments on undisbursed loans. Government no longer has the liberty of accommodating such gruesome public find mismanagement blunders which cost us huge sums of money,” says Mukunda.
Mukunda also says government should request other lenders for a moratorium on debt servicing for at least three years and renegotiate with the bond holders to increase the bond maturity periods.
”We are confident that there is still room for dialogue between the Government of Uganda and the World Bank to reconsider its decision on halting funding to Uganda and we were encouraged by the statement of our Head of State, on seeking dialogue with the World Bank. This is a good step in the right direction, and we add our voice to urge the World Bank to reconsider its position given the multiplier effects it is going to have on the people living in Uganda especially the poor,” added Mukunda.