World Bank Approves US$100 Million Credit to Support Uganda’s National Budget

September 30, 2010

WASHINGTON, September 30, 2010 – The World Bank Board of Executive Directors today approved an International Development Association (IDA) credit of US$100 million to finance part of Uganda’s National Budget. The eighth Poverty Reduction Support Credit (PRSC8) covering the financial year 2010/11, includes US$40 million provided under the pilot Crisis Response Window to help Uganda to respond to the challenges posed by the global economic crisis.

PRSC8 is the first in a series of three operations to support Uganda’s National Development Plan, and the first to be designed under the Joint Budget Support Framework together with the Government of Uganda and 10 other development partners.

“The move towards a collaborative joint budget support arrangement developed by the Government of Uganda and Uganda’s development partners is an important step towards realizing effective aid. It has reduced transaction costs for the Government of Uganda, increased national ownership, and improved budget support transparency and predictability,” said Paul Wade, Senior Country Economist for Uganda and Task Team Leader for the Operation.

The new PRSC series focuses on improving equity and value for money in public service delivery with sector-specific reforms in health, education, water, sanitation and transport.

The credit will supplement the Government’s own resources and funding from other budget support development partners. It aims to bolster Uganda’s impressive economic performance and steady poverty reduction over the past decade. The share of Ugandan households living in poverty fell from 44 percent in 1997 to 31 percent in 2005/06. However, whilst approving the credit, the Executive Directors expressed concern over the slow progress on important governance reforms and growing corruption challenges.

“PRSC8 marks a reduction in the annual volume of the Bank’s direct budget support compared with previous years. The reduction is indicative of the slow progress towards the establishment of a performance management system in public service and an improved public procurement law that befits international best practice. However, the Ugandan authorities have reiterated their commitment to improving performance in these areas,” said Kundhavi Kadiresan, World Bank Country Manager for Uganda.

The World Bank has provided close to US$6.5 billion in loans and grants to Uganda since 1963, and has already committed US$1.2 billion to finance various programs and projects between 2009 and 2011. The Bank’s current portfolio in Uganda consists of 20 IDA-financed projects with a net commitment of approximately US$1.5 billion.

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