Gov't overspending on defence, says IMF

The International Monetary Fund (IMF) has warned that Uganda must stick to its budget plans, particularly in the area of defence.

"They [IMF directors] note with concern that, in the fiscal year 2002/03, in light of the security problems in the north of the country, defence spending will be considerably higher than budgeted," said the IMF in a summary of its annual review of the Ugandan economy.

The financial body said its directors had expressed concern that in recent years government spending had deviated substantially from budget intentions, and in the under-financing of some social and economic programmes.

It said it welcomed the government's ongoing defence review, and urged authorities to speedily streamline their public expenditure to improve efficiency and free up resources for poverty-related and development initiatives.

Given the expenditure needs of the country, the government would have to improve tax collection methods, and possibly raise taxes to reduce the budget deficit and the country's "heavy dependence on external aid", the IMF added.

Uganda was also praised for its implementation of disciplined financial policies and structural reforms, its improved banking system, and progress made in budget management.