KAMPALA. President
Museveni has written to the World Bank (WB) promising that his
government is addressing the structural gaps and other loopholes that
compelled the bank early this month to announce withholding of more than
$1.5b (Shs5 trillion) in new lending until further notice. The
President’s letter to WB, also copied to senior officials in the
Ministry of Finance, is part of efforts by government to salvage the
loans and save many projects whose failure could have wide economic and
political ramifications. The secretary to the treasury, Mr Keith Muhakanizi, confirmed that the President has engaged the WB to resolve the issue. Mr
Muhakanizi who is scheduled to travel to the Bank’s headquarters in
Washington DC next month as part of a delegation led by Finance minister
Matia Kasaija to plead Uganda’s case at the International Development
Association (IDA) 18 Replenishment negotiation meeting, also told this
newspaper on Wednesday that the President has further directed that
accounting officers that fail to justifiably absorb loans be punished. IDA
is the bank’s concessional funding arm to low-income and post-conflict
countries. The WB in its assessment of performance on external financing
said Uganda performed dismally with 72 per cent of projects being
unsatisfactory between 2007 and June 2016. Only 15 per cent of projects
are considered satisfactory. The bank thus in a September 13
statement said it “took a decision to withhold new lending to Uganda
effective August 22, 2016 while reviewing the country’s portfolio in
consultation with the government.” The statement noted that the bank
would continue to “work with the Ugandan authorities to address the
outstanding performance issues in the portfolio, including delays in
project effectiveness, weaknesses in safeguards monitoring and
enforcement, and low disbursement.” The bank, however, assured
that projects already approved by its board before August 22 worth $1.8b
(Shs6 trillion) will remain active. The loans that have not been
absorbed also amount to $1.8b. Sources familiar with the matter told
this newspaper that the Ministry of Education tops the list of MDAs with
the lowest absorption capacity. Explaining how the country got
into this situation, Mr Muhakanizi said: “This is largely inefficiency
and a management problem on the part of accounting officers and it
definitely bounces back to affect our planning.” He added that
absorption had gone down partly as a result of the ongoing reforms
instituted to contain the high frequency leakages (corruption) in the
sectors for which the loans are acquired. “So the accounting officers then decide to sit back on the money,” he explained. Some
of the reforms the Finance ministry has instituted include cleaning-up
the payroll to exorcise it of thousands of “ghosts” and tightening the
procurement system – especially introduction of the e-procurement
system. The other guidelines that finance officials will table in
Washington, he said, is for all projects to have a “component of
benchmarking by Parliament” before the loans are approved. Previously,
he explained, ministries would push to get loans whose absorption and
project implementation plans are not ready. “For all loans that
have not been absorbed, I have evidence where the ministers say they
were ready. But by adding a component of benchmarking, they have to
justify the request and also satisfy that they are ready.” Currently,
the Bank’s loans go through only four stages, namely Identification (of
a project), Pre-appraisal, Appraisal and Negotiations. The numbers Shs5 trillion Amount of money that the World Bank
withdrew in new lending rates until further notes due to Uganda’s
decimal performance on external financing. SOURCE: DAILY MONITOR
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