Donors to Fund 29% of Uganda Budget as Projects Get Extra Boost

Uganda will rely on donors to fund 29 percent of its budget in the 12 months through June next year as the East African country boosts spending on infrastructure projects, Finance Minister Matia Kasaija said.

Donors will contribute 5.65 trillion shillings ($1.7 billion), while the government will raise 13.54 trillion shillings toward the 19.2 trillion shillings in planned expenditure, Kasaija told reporters Tuesday in the capital, Kampala. Another 4.79 trillion shillings has been set aside for domestic debt repayments.

The government funded 80 percent of its own budget in the past fiscal year, with the proportion of donor support this year being driven higher by spending on large infrastructure projects, such as the 600-megawatt Karuma and 183-megawatt Isimba hydropower projects being built by Chinese companies, he said.

The local currency is being hurt by a surge in imports estimated at $5.1 billion for the fiscal year, compared with exports seen at $2.7 billion, the finance minister said. The widening current account and trade deficits can be attributed to “heavy” private-sector investments, he said.

The central bank will “intervene appropriately” in the market to avoid large swings in the exchange rate, Kasaija said. The shilling declined 21 percent against the dollar over the past 12 months, which can also be attributed to gains in the greenback, he said.

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