Home News CSOs to Gov’t: Reduce expenditures, renegotiate existing loans to close World Bank...

CSOs to Gov’t: Reduce expenditures, renegotiate existing loans to close World Bank funding gap


Members of the Civil Society Budget Advocacy Group (CSBAG) have tabled numerous proposals which they think government can implement and minimize the likely shock that will be brought by the World Bank Group (WB)’a withdrawal from Uganda.

The WB last week shocked the country in a statement where it announced that it had halted approving any new loan due to the recent enactment of the Anti-Homosexuality Act, 2023.

The Bank in a statement said the law “is against our values of inclusion” and said until they are assured that the homos won’t be affected, no new loan will be approved.

CSBAG and its member organizations on Sunday said government can overcome all this as long as they handle well the current finances.

Government, they said should reduce public administration costs by reviewing public service salaries, restructure Uganda’s debt financing, and renegotiate funding priorities by WB to counter the over Shs6.7 trillion funding gap that has been created.

“There are certain programs that if not implemented, will dent our development outcomes. For example, road maintenance and repair if not done will likely increase the cost of production,” said Gilbert Musinguzi, the Quality Assurance Manager at the Uganda Debt Network (UDN).

“Government should request other lenders for a moratorium on debt servicing for at least three years and renegotiate with the bondholders to increase the bond maturity periods,” he added.

Important to note is that WB is among the leading donors where government is expecting to get about Shs3.01 trillion in grants to fund part of its Shs52.7 trillion budget.

Of the total Shs52.7 trillion budget, Shs8.01 trillion is expected to be raised from external funding where Shs5.3 trillion are loans while Shs3.01 trillion are grants.

Finance State Minister Mr Henry Musasizi last week said government is planning to revise its budget downwards to close this gap if their ongoing negotiations with the international bank doesn’t work out.

Those who were giving their perspective on the World Bank funds halt predicted doom in the near future if government fails to handle the fund gap

The WB currently dominates 55 percent of the country’s public debt stock.

Speaking to journalists on Sunday, the executive director of CSBAG Mr Julius Mukunda said that the decision has far reaching impact including; an increase in economic inequality, reduced financing in social sectors, increased pressure for commercial loans and domestic borrowing, and Effect on Uganda’s foreign exchange stability.

“We are concerned its decision is likely to increase economic inequality. This is amidst the rise in poverty as reported by the Africa Development Bank, Economic Outlook report, 2023, where poverty in Uganda increased by 4.2 percent in 2022 from 15.61 million Ugandans to 16.36 million,” he said adding,

“The World Bank contributes significantly to funding social sector projects that impact the livelihoods of people living in Uganda. To note is that 44 percent of this was earmarked for the Human Capital Development Programme, and 7 percent for Agro-Industrialization. Key World Bank projects include, for example, the U-learn project, which is aimed at expanding traditional schools, Phase,”

The foreign direct investment (FDI), he said is also likely to worsen Since the World Bank funding plays an important role in boosting the portfolio of FDI in Uganda.

“For example, Uganda’s FDI stock has been surging, following the deep dive during the COVID-19 pandemic period, from USD 920.03 million in the financial year 2020/21 to USD 2197.41 million in FY202/23 (Annex 3). FDIs play a significant role in the economic development and growth of a country. promotes; Technology Transfer, Job Creation Enhanced Productivity, Export Promotion, Infrastructure Development: Economic Diversification: Improved Balance of Payments: Government Revenue, Encouragement of Domestic competitiveness, Investment: Knowledge and Skills Transfer, and many other things. This, therefore, goes without saying that our economic trajectory will face many challenges,” he said

Ms Angela Kasule Nabwowe the executive director of the Initiative for Social and Economic Rights said that the education sector is also likely to be hit hard because the majority of the seed secondary schools are being constructed with support from WB.

“Negative effect on private sector growth: The World Bank decision will have two likely implications on the private sector growth. First, the investors investing in the country are likely to pull out which will create scarcity of expertise in areas where we don’t have a competitive advantage for the few companies. Second, local companies that have been subcontracted by international companies to provide services in roads, water, and electricity to these companies are going also to lose out,” she said.

The CSOs also called upon government to continue engaging WB so that the latter reverses their decision.

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