Reforms Timeline

Reforms Timeline

Structural Adjustment Reforms

Structural Adjustment Reforms
Uganda had been implementing an ambitious and successful program of macroeconomic adjustment and structural reform since 1987, with strong support from multilateral and bilateral creditors and donors. The government’s continued application of appropriate fiscal and monetary policies and of a program of substantial economic liberalization had to be instituted for a sustained and maintained high growth, low inflation, a steadily improving balance of payments, and an increasingly vibrant and diversified private sector. In April 1998, Uganda became the first country to reach its completion point under the Initiative for Heavily Indebted Poor Countries (HIPC Initiative) as the Executive Boards of the IMF and IDA agreed that the necessary conditions had been fulfilled.

URA Established

URA Established

Uganda Revenue Authority was established and set up as a central body by a URA Statute of 1991 for the assessment and collection of specified revenue. (99) A sole government institution responsible for the collection of central government revenue. In 1991, when URA was established, tax collection was 6.83% of GDP, amounting to UGX:133 billion. In 2015, taxes collected were 13% of GDP, amounting to UGX:11.2 trillion. URA targets to increase tax collection to at least 16% of GDP by 2020

Uganda Revenue Authority

Decentralization Policy

Decentralization Policy

In 1992, the government of Uganda implemented the decentralization policy with the expressed goals of enabling inclusive economic development and nation-wide democratic participation. There was a strong consensus, at the time in the  trending literature of the time that decentralization had the potential to increase participation of local communities and citizens, improve government service delivery, and achieve a better level of governance that was more transparent and accountable.

GOALS OF DECENTRALIZATION
The main objectives of decentralization as outlined by the Local Government Act of 1997 are:

  • To give full effect to the decentralization of functions, powers, responsibilities, and services at all levels of Local Government (LG);
  • To ensure democratic participation in, and control of, decision making by the people concerned;
  • To establish a democratic, political and gender-sensitive administrative set up in LGs;
  • To establish sources of revenue and financial accountability;
  • To provide for the election of local councils;
  • To establish and provide for the composition of interim councils for newly created LG units pending elections of the councils; and
  • To provide for formation of interim executive committees for interim councils

Fiscal Decentralization

Fiscal Decentralization

In 1993,Uganda had one of the most ambitious decentralisation programmes amongst developing countries . Decentralisation was central to Uganda’s mode of governance as spelt out in her 1995 Constitution and as the 1997 Local Governments Act conferred. The process of decentralisation was at the heart Poverty Eradication Action Plan (PEAP), which set out the strategy through which the Government of Uganda (GoU) aimed to eradicate absolute Poverty by 2017. The PEAP was implemented through the Medium Term Expenditure Framework (MTEF). The GoU therefore, was a front runner in translating debt relief under the Highly Indebted Poor Country Initiative into increased financing for Poverty Reduction Programmes via the Poverty Action Fund (PAF). This combination of the PEAP/MTEF framework and the PAF resource transfer modalities gave donors sufficient confidence to provide a growing proportion of their aid as budget support.

 

As a result, over the past three years there has been an extraordinary rate of growth in social sector expenditure, with expenditures on PAF programmes growing from 17% to 34% of the Government of Uganda Budget. Due to Uganda’s Decentralisation Policy, this has meant a rapid increase in resource flows to local governments, and a corresponding increase in primary service provision. As PAF expenditures are tied to the achievement of PEAP Goals, the majority of the increase in transfer of resources has been via an increasing number of conditional grants.

Medium Term Expenditure framework

Medium Term Expenditure framework

Although work on a more medium-term fiscal framework began in 1992, 1994 is regarded as the first year of the MTEF reform. MTEF is annual, rolling three year-expenditure planning. It sets out the medium-term expenditure priorities and hard budget constraints against which sector plans can be developed and refined.

A key distinguishing feature of an MTEF is the integration of policy, planning and budgeting within a medium-term perspective. An MTEF typically consists of a top-down resource envelope consistent with macroeconomic stability and broad policy priorities and a bottom-up estimate of the current and medium-term cost of existing national programmes and activities and an iterative process of decision-making that reconciles these costs with available resources.

In Uganda, the initial MTEF exercise was a direct response to the deterioration of macro-fiscal performance and the inability of the Government to meet its counterpart funding commitments on donor-financed projects. Later the MTEF took on the role of facilitating shifts in sectoral allocations, particularly to pro-poor sectors.

Output Based Budgeting

Output Based Budgeting

This reform involved a phased approach to the adoption of Output-Based Budgeting (OOB) since the early 2000s which was later supported by an Output Budgeting Tool (OBT) during the FY2008/09 to FY2016/17 period.

The OBT was an IT-based budgeting tool that is used by the ministry of finance to coordinate budget implementation in terms of work plans, outputs and expenditure. At the beginning of every fiscal year, line ministries, government departments, and agencies and local governments generate data on staff names and work plans within the budget as provided by the budget framework paper that indicates planning figures. The work plans are matched with anticipated outputs and expenditure estimates. On a quarterly basis, the ministry of finance generates reports to monitor the progress of budget implementation at the different levels of government.

The OBT prepared pathways for the introduction of the Programme Based Budgeting and the use of the Programme Based Budgeting system. This is part of the PFM reforms phasing strategy of Uganda.

To sustain the new reform, additional economists as part of the graduate economists scheme has been supported by the FINMAPIII programme and continues to be operationalised under REAP.

Budget Act 2001

Budget Act 2001
The Act  was intended to Provide for And Regulate the Budgetary Procedure for a Systematic and Efficient Budgetary Process and for other matters Connected to it.  

Budget transparency reform

Budget transparency reform

Uganda, like many developing countries, suffered from poor quality basic service provision and weak mechanisms for accountability at the local level.  At the time, Uganda had a relatively strong track record in budget transparency, and is ranked second in Africa in the Open Budget Index.  However, these efforts have not been systematic, and it is unclear to which extent they have improved accountability. Due to a 2010 reform, the Ministry of Finance receives detailed project-by-project reports on budget allocations and alleged quarterly expenditures from local governments via an output based digital budget reporting tool. However, local stakeholders, including elected representatives whose mandate it is to monitor service provision, are largely unaware of this information.

To help address this problem, the Ugandan Ministry of Finance, ACODE, ODI, and IPA launched a Budget Transparency Initiative to make department, project- and location-specific budget information available to politicians, opinion leaders, and the public; and to mobilize them to monitor and provide feedback on the spending and services provided by government institutions.

Public procurement and disposal of Assets

Public procurement and disposal of Assets

The Public Procurement and Disposal of Public Assets Act 1 of 2003 set up the Public Procurement and Disposal of Public Assets Authority (PPDA) as the principal regulatory body for public procurement and disposal of public assets in Uganda. The amendments to the PPDA law have introduced several changes prominent of which is the strengthening and enhancement of the role of PPDA in the execution of its regulatory mandate.

The mandate of PPDA has been enhanced by addition of the following functions:

1.Suspension of a provider by the Authority
2. Accreditation of an alternative procurement and disposal system
3. Waivers and Deviation
4. Entry into the premises of Government entities
5. Directing an Entity to take corrective action
6. Reservation Schemes