WASHINGTON, January 17, 2006 – The World Bank Board of Directors today discussed the Uganda Joint Assistance Strategy (UJAS) and approved an International Development Association (IDA) grant of US$112.5 million and a credit* of US$22.5 million, to finance the fifth Poverty Reduction Support Operation (PRSC5).
The Uganda Joint Assistance Strategy presents a core strategy of seven development partners for 2005–09, and provides the basis for the partners’ support for the implementation of the government’s new Poverty Eradication Action Plan (PEAP) covering 2005/06–2008/09. It has been prepared collaboratively by the UJAS partners: African Development Bank (AfDB), Germany, the Netherlands, Norway, Sweden, the United Kingdom’s Department for International Development (DFID), and the World Bank Group. The UJAS provides a useful strategic framework for dialogue, including issues of governance, corruption, and public financial management, while providing the space for each UJAS partner to exercise sufficient flexibility in its response to evolving trends, based on mandate and comparative advantage.
The Executive Directors commended the Uganda Joint Assistance Strategy for putting into practice the principles of the Rome and Paris Declaration on aid effectiveness. A number of the Executive Directors recommended that the UJAS serve as a model for achieving better coordination among development partners in support of the Government’s development goals. They also welcomed the intentions of other development partners to join the UJAS in the near future.
The Directors commended Uganda on its consistently good economic performance but expressed concern about aspects of political governance. They agreed that the main economic challenge is to maintain high and widely-shared growth, which will require addressing key constraints—improving infrastructure, especially in rural areas, removing obstacles to private sector investment, and promoting faster regional and international integration. They urged the Government of Uganda to continue to:
o strengthen its anti-corruption institutions and its systems of public financial management to reduce opportunities for corruption,
o intensify its efforts to bring peace and development to the north, and
o adopt measures to address its exceptionally high population growth rate which impedes progress toward PEAP objectives and the Millennium Development Goals.
The Board of Directors also approved the PRSC5 which provides external resources necessary for the execution of the Government budget and supports the economic and institutional environment for the sustained implementation of PEAP reforms, including budget execution, rural development, public service reform, decentralization, anti-corruption, public financial management and human development (education, health, water and sanitation). The Directors approved a ten percent reduction of the PRSC5 amount to US$135 million to reflect their concerns about expenditure overruns in the public administration budget. The Directors expressed concern that this trend might further escalate during the current fiscal year if no initiatives are taken to mitigate over-expenditure in this sector.
In closing, the Board of Directors highlighted the importance of Government leadership in implementation of the PEAP and UJAS and welcomed UJAS partner commitments to increasing the effectiveness of their support to Uganda.
* The credit is on standard International Development Association (IDA) terms, with a commitment fee of 0.35 percent and a service charge of 0.75 percent. The credit’s period of maturity is 40 years, including a 10-year period of grace.