Donors reject proposed budget on grounds of defence spending

Uganda's donors have unanimously rejected the 2004/5 budget proposed by Finance Minister Gerald Sendawula, citing excessive public administration costs and unjustified increases in defence spending. "We unfortunately are not able to endorse the draft budget presented to parliament on 1 April. We do not find it a convincing reflection of the PEAP [poverty eradication action plan] priorities, and key elements of the budget, notably defence and public administration, remain too high," said a joint statement by donors involved in providing Uganda with budgetary support. Donors currently supply around half of Uganda's total public sector budget. But Sendawula told IRIN the government was still in dialogue with donors about his budget, which would be finalised by June. "They (donors) have to make an input. We are still in dialogue with them," Sendawula told IRIN. "They want us to justify to them the reasons for increased defence spending," he continued. "They are free to come and say we do not agree with the way you are proposing to allocate resources." Warner-ten Kate, an economist at the Netherlands embassy in the capital, Kampala, told IRIN that "one of the problems is that you have a very high budget, with disappointing tax revenues. Then there's the defence issue: though there was a defence review, we aren't convinced that the budget really reflected it." The issue of defence has been a thorny one between donors and President Yoweri Museveni, who has repeatedly asked for caps on defence spending to be lifted to enable more resources to be devoted to protecting civilians in the country's war-torn northern regions. Civilians are frequently targeted by the rebel Lord's Resistance Army (LRA) while the government's Uganda People's Defence Forces have often failed to protect civilians. Museveni blames donors' defence-spending restrictions for the failures. But donors say too much is being spent already. "Defence spending rises by 19 percent to a proposed U. shs 367 billion [US $19.2 million] in 2004/05, after a 48 percent increase in the preceding two years. We are not yet convinced that these large increases in proposed defence spending are sufficiently justified, or that the relevant management changes identified under the Defence Review will be in place to effectively manage such an increase," said the statement by the donors. Kate said the main issue was that defence spending was too often lost to corruption and inefficiency. "The defence sector is not disciplined enough," he said. "We want credible assurances that reforms are on the way." Besides defence, plans by the government to hold an expensive referendum on whether or not to amend the constitution to allow Museveni to run for a third term in office - at a cost of 30 billion Uganda shillings - were also rejected. Donors argue that the proposed referendum is unnecessary, because Uganda's transition to multiparty democracy would be better served if Museveni stepped down and allowed Uganda's traditional parties to vet candidates for election. They note that Uganda has not yet had a peaceful transition of government since independence in 1963. Kate warned that Uganda's major donors could pull the plug on its funds if agreement could be reached. "If there's no agreement about the budget, then the IMF and the World Bank cannot go on like this," he said.