THE government should prepare for more announcements of cuts in budget support, sources within the diplomatic community in Kampala have warned.

Many more development partners especially from the European Union countries, who constitute the biggest block of aid donors, are expected to make back-to-back announcements on aid cuts over the next few months.

A highly placed source in the diplomatic circles warned that the country should expect a similar trend like that of last year when the Irish, the Dutch and the Norwegians announced aid cuts in succession after Britain.
On Monday, UK decided to cut its budgetary support to Uganda for the financial year 2006/07 by £20 million.

This was a protest against bloated public administration expenditures, governance and allocation of inadequate resources towards the energy sector.
This is the second time Britain, one of Uganda's principal donors, is cutting aid to Uganda. The first was in December 2005. Dfid, UK's international development agency sent a clarification yesterday though saying that the country's overall aid for this Financial Year was increased to £70 million.

The aid cut was only effected on the direct budget support for which UK had committed itself to providing £55 million in 2006/07 fiscal year.
However, the source told Daily Monitor that many donors were not satisfied with the government's choice of priorities in the annual budget allocations read out last month.
Nearly all donors seem to disagree with the government over the unexplained increase on public administration expenditure.

“Many of us would have expected the government to allocate more money on sectors like agriculture, energy if they are serious with this transformation thing,”the source said.

“Instead they are spending money on paying salaries and buying cars.”
Mr Tom Vens, the Head of the EU economic section, said the government's allocation of about 15% of the budget resources on public expenditure was objectionable to them.
"The EU has to analyse what is behind this (allocation)," he said.

On Friday, the European Union received a request of Euros 35 million in budgetary support from the government of Uganda for the fiscal year 2006/07. However, Vens said they were still assessing whether Uganda had met all the conditions agreed upon before the sum is released.

Skeptical
“We are still studying the situation, but most likely it will not be the full amount, because the government has not yet achieved some of the technical aspects,” he said.
“It [government] hasn't achieved its targets of reform of procurement, health and education.”

Public administration has for sometime been a major source of disagreements between donors and the government with the former appealing to President Yoweri Museveni to take wide-ranging reforms to consolidate administrative work and reduce unnecessary government personnel.

Another source said the British have only led the way and other would follow soon.
The source warned that the Irish, the Norwegians and Dutch could soon take action.
The government pays over 100 presidential advisers and assistants, 69 ministers, 305 members of Parliament.

There are over 90 semi autonomous government bodies and more than 70 districts.
Each district has it's own extensive and costly bureaucracy.
Efforts to get a comment from the Irish and French embassies failed.

Not taken yet decision
The acting Danish Ambassador, Ms Lis Garval, said her government had not yet considered aid cuts.

“Our policy is that we engage with the government and try to talk and discuss if there are issues that we are not comfortable with,” she said. Garval, however, said she would wait until her home country communicates any new position.
According to Prof. Ogenga Latigo, the Parliament leader of the opposition, donors last year objected to the increasing number of districts.

The donors argue that if administrative work was consolidated and rationalised, the excessive waste of public resources and corruption would be minimised.
They say the saved resources would be spent on starved sectors like health, education and northern Uganda rehabilitation.

Refused
But Museveni has refused to budge saying the bloated government bureaucracy was the cost of democracy as he struggles with the need to balance the country's plethora of ethnic groups.
Ogenga told Daily Monitor that it’s unfortunate that donors are cutting aid, “But the government made a commitment and it has to be held accountable for that.”

Govt not informed
Information Minister Kirunda Kivejinja said the government had not been officially notified by the British about their decision to renege on their aid commitment.
He said he could not comment on the matter adequately.

When the donors squeezed the government last year over the pace of multiparty democracy, the Ministry of Finance together with the prime minister had to restrict ministerial travel and other auxiliary expenditures by ministries and other government departments as part of austerity measures to contain the cash constraints.
Even then, the donor action's impact was limited because the domestic economy was still robust and URA collections were steady and growing in volume.

The country is experiencing a power crisis that is shaking the economy, spawning distress for manufactures and the services industry; the principal revenue generators.
As a result, the Uganda Revenue Authority has since January continuously registered tax collection shortfalls.

While reading the budget last month, the Minister of Finance, Planning and Economic Planning, Dr Ezra Suruma, announced that the manufacturing sector had constricted by -0.3 per cent in the financial year 2005/06.