Uganda - Poverty reduction strategy paper and assessment

20317 April 3, 2000 INTERNATIONAL MONETARY FUND AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION UGANDA Poverty Reduction Strategy Paper Joint Staff Assessment Prepared by the Staffs of the IMF and IDA Approved by Anupam Basu and Anthony Boote (IMF) and Callisto Madavo and Masood Ahmed (IDA) March 31, 2000 Evolution of Uganda's Poverty Reduction Strategy Paper (PRSP) 1995: Seminar on poverty eradication organized by the govermnent of Uganda in collaboration with the World Bank. Participants included govermnent representatives, NGOs, and the donor community. 1997: Publication of the Poverty Eradication Action Plan (PEAP). 1997/98: First utilization of the Medium-Term Expenditure Framework (MTEF) to better align spending priorities with the PEAP. 1998: Establishment of a Poverty Action Fund (PAF) to enhance transparency and monitoring of the resources provided under the HIPC Initiative and other donor resources for poverty reduction. 1998: The Uganda Participatory Poverty Assessment Project (UPPAP) was launched. 1999: Issuance of the Poverty Status Report (PSR). 1999 (Dec.): Revision of the PEAP initiated. 2000 (Mar.): A draft of the revised PEAP produced and a Poverty Reduction Strategy Paper (PRSP) combining a summary of the revised PEAP and the 2000/01-2002/03 MTEF issued. 2000 (May): A revised PEAP produced. F)LE r PYnI rllr rY   - 2 - I. INTRODUCTION 1. Uganda's Poverty Eradication Action Plan (PEAP) was first formulated in 1997, and has subsequently been the basis of the govermment's development strategy and budget planning system. In December 1999, the government made the decision to update the PEAP taking into account developments since 1997. This revision is currently under way, and is expected to be completed in May 2000. On March 23, 2000, the Uganda Government presented a revised PEAP and a draft of the Summary and Main Objectives of the revised PEAP at the Consultative Group meeting convened in Kampala, Uganda. 2. The Joint Staff Assessment concerns Uganda's first Poverty Reduction Strategy (PRSP), which brings together the Summary and Main Objectives of the revised PEAP and the Medium Term Expenditure Framework (MTEF). The summary of the PEAP sets forth the analysis of poverty, the objectives of the strategy, and the prioritization and costings of the measures, while the MTEF integrates these features into a medium-term budget and macroeconomic framework. Section II of this Joint Staff Assessment highlights the important features of the revised PEAP. Section III provides an assessment of the strengths and weaknesses of the PRSP, while Section IV sets out the staff's conclusions. 11. BACKGROUND TO THE REVISIONS OF THE PEAP 3. A revision of the PEAP was considered necessary for two broad reasons. First, new information on poverty had been collected by the government, which needed to be factored into the strategy. This included more recent household survey data. The government has conducted annual household surveys measuring the living standards of the population over the period 1992-97. Very few developing countries have annual poverty estimates for five consecutive years. The latest survey (for 1999/2000) is currently being conducted in the field. These surveys have shown a notable decline in income poverty during the 1990s-with headcount poverty falling from 56 percent in 1992 to 44 percent in 1997. Two Demographic and Health Surveys have also been completed, and have shown gains in human development indicators. The government has also drawn on National Service Delivery Surveys undertaken in 1996 and 1998, which obtained information on user satisfaction of government-supported services. It also benefited from a firm survey, which provided important insights into the constraints that Ugandan firms face. To complement the quantitative information on poverty incidence, the government launched in 1998 the Uganda Participatory Poverty Assessment Project (UPPAP). Using participatory techniques from nine different districts, the UPPAP provided information from the poor themselves on their concerns and perceived constraints, enabling the government to get a more complete appreciation of the nature of poverty in Uganda. The government plans to extend the UPPAP to cover all districts. The publication by the government of the first Poverty Status Report (PSR) in 1999 brought the new information developed since the initial PEAP in 1997 to the policy arena. The government intends to revise its PEAP every two years to take account of new information. 4. Second, there were significant developments in the planning process itself, which called for a revision to the PEAP. The MTEF, which was launched in 1997/98, has in the  -3 - intervening years been strengthened, and now provides a much closer link between initial budget allocations and actual budget outtums. As part of the preparation of this year's MTEF, key sectors (i.e., health, education, and water) are expected to develop explicit links between budgetary allocations and anticipated outputs. In addition, over the last two years, several of the sectors central to poverty eradication (e.g., health, education, and agriculture) have developed detailed sector plans that permit a better prioritization of interventions in these areas, and their linkages to budget decisions. This has been most noteworthy in the education sector, where the introduction of Universal Primary Education (UPE) has led to a significant refinement of sector priorities and budget allocations. In a key development, the Poverty Action Fund (PAF) was established in 1998 in order to prioritize budget allocations, which benefited the poor directly. 5. The revision of the PEAP, like the preparation of the initial PEAP, has been an exceptionally open and participatory endeavor. The initial PEAP was completed in 1997 after a two-year period involving extensive inputs from stakeholders. It reflected the recommendations of a major poverty conference held in Kampala in late 1995, with the participation of President Museveni, key ministries, civil society, and donors. The conference agreed that a working group drawn from government, civil society, and donors be established to make policy and program recommendations on how the government could strengthen its poverty eradication efforts. This was quickly initiated, and all groups became fully engaged in the process. The working group on poverty completed the preparation of the first PEAP in early 1997. 6. The revision of the PEAP has built on this highly participatory process. First, the PEAP is closely integrated with the MTEF, which itself involves highly participatory and transparent processes. The government fully engages donors, NGOs, and other stakeholders in the preparation of the MTEF, ensuring that key resource allocation decisions include inputs from these stakeholders. Following approval by cabinet, the MTEF is then presented to donors and civil society for discussion, prior to the presentation to parliament of the annual budget. This provides a measure of public accountability for the spending choices made by the government. Second, the revision of the PEAP itself has involved extensive consultations with line ministries, donors, parliamentarians, and civil society. A meeting of NGOs (arranged by OXFAM) was held in January this year to discuss the HIPC debt relief initiative, and there was broad recognition that civil society participation in policy and program development in Uganda had expanded and deepened dramatically over the past five years. Government, IMF, and World Bank participants at this meeting assured the NGOs that every effort would be made to sustain and enhance this feature of the PRSP/PEAP process. In addition to this meeting, the government has organized two major consultation meetings, involving a wide spectrun of Ugandan society (politicians, ministries, donors, media, NGOs, private sector, civil society, local authority representatives, and academics). One was held in February 2000 to review the first draft of the revised PEAP. A second meeting is scheduled for April 2000. The PRSP and the draft of the revised PEAP were also presented to the meeting of the Consultative Group for Uganda in Kampala on March 23, 2000.  -4 - 7. The government has correctly identified that poverty reduction requires sustained economic growth in a context of macroeconomic stability and has committed itself to implementing sound financial policies and structural and institutional reforms to support rapid, broad-based economic growth and improve the quality of public services. The PEAP is implemented through the government's MTEF, and is deliberately nested into the macroeconomic strategy of the government. Consistent with the latest Memorandum of Economic and Financial Policies (MEFP),' the overall medium-term macroeconomic objectives, as set forth in the revised PEAP, are annual real GDP growth of 7 percent, annual inflation of about 5 percent, and gross international reserves equivalent to about five months of imports of goods and nonfactor services. The PRSP sets out in some detail, and provides up-to-date information on the consistency between poverty reduction actions, the MTEF and the macroeconomic framework that the government has put in place. III. STRENGTHS AND WEAKNESSES OF THE PRSP 8. The PRSP presents a clear statement of the poverty eradication goals that the government has set, focusing on the reduction in absolute income poverty to 10 percent by 2017, universal primary enrollment (along with higher primary completion rates and education achievement), and a series of other human development goals for the year 2004/05: reduction of infant mortality to no more than 103 per thousand, cuts in HIV prevalence by 35 percent, declines in stunting to 28 percent, and total fertility rates to 5.4 births per woman. The PRSP outlines the elements of the government's approach to achieving these goals, consisting of well-developed interventions in four broad areas: creating a framework for economic growth and transformation; ensuring good governance and security; directly increasing the ability of the poor to raise their incomes; and directly increasing the quality of life of the poor. In each of these areas, the documents describe the specific actions that the government intends to pursue over the medium term. 9. The exceptional database on which the PRSP is based has already been noted. The marked improvement in the information base, comprising both structured and participatory data on the living conditions of the poor, has led the government to revise the PEAP this year, and these data have been subject to careful policy-relevant analysis. The PRSP incorporates recent work (both in Uganda and in the World Bank) on the determinants of growth, and their implications for the growth prospects of the Ugandan economy. The document supports the feasibility of the assumed growth scenario of 7 percent a year, and defines the conditions under which it can be attained. It also explicitly analyzes reduction in the amount of income poverty that such growth might yield, emphasizing that accelerating agricultural growth and rural nonfarm activity are the key to the success of the strategy. Analysis of the household survey data has shown a sharp difference between farmers engaged in cash crop production, who have gained from the combined effects of export market liberalization and the coffee price boom, and food subsistence farmers, who have not l See EBS/../00.  - 5 - gained appreciably from the growth recovery of the 1990s. In the staffs view, the PRSP correctly highlights the need for improved feeder roads and agricultural extension targeted at smallholder farmers. It also reports the findings of benefit incidence studies, and more detailed public expenditure tracking exercises, which identified the extent to which the poor benefited from public spending. From this work, the conclusion is drawn that greater effort is needed to improve the delivery of public services to the beneficiaries. 10. The PRSP is also grounded in a sound and effective planning and budget process in Uganda. Poverty eradication is not detached from the budget process, but fully embedded in it. The PRSP has drawn heavily on the sector programs, which were developed as part of the MTEF. These programs established output targets within an agreed resource envelop, thereby respecting the need to maintain overall macroeconomic balance. The sector strategies seek to establish links between the available budget and the output targets through costing exercises. Such exercises have been completed for the education, health, and water sectors. 11. The historical record has shown that the government budget has been consistent with the recommendations of the original PEAP. The 1997 PEAP had an immediate effect on budget allocations; the 1998/99 budget included significant increases in appropriations to all four key poverty reduction sectors identified in the document (agriculture, roads, primary education, and basic health). This process has been sustained; the 2000/01 budget envisages increases in expenditures on key poverty-reducing areas to 31 percent of the total budget, about twice the percentage of the pre-PEAP 1997/98 budget. The results of the UPPAP have also had a direct effect on budget allocations. In this regard, in response to the high priority placed by poor communities on the availability of safe water, there has been a significant shift toward spending on water under the MTEF. 12. The PAF is fully integrated into the government budget and has been a key instrument in the operationalization of the poverty strategy. Using donor budget support and the resources made available to Uganda under the first Highly Indebted Poor Countries Initiative (HIPC I), the PAF provides additional resources to those activities identified as important under the PEAP. The activities under the PAF are also subject to a higher degree of transparency and accountability than the rest of the government budget. A quarterly report on PAF activities is discussed with donors and NGOs and 5 percent of the PAF resources are set aside for monitoring and accountability of PAF-funded activities. The PRSP correctly emphasizes the role of the PAF, which earnarks funds for the key poverty reduction programs, ensuring additionality of government resources for the poverty eradication effort. Evidence to date shows a sharp increase in PAF funding of poverty reduction programs. 13. In sum, the main strengths of the PRSP are the sound informational and analytical base of its strategy, its close two-way interaction with the MTEF, its consequent consistency with Uganda's macroeconomic framework, and its use of the PAF, which ensures that increased resources are allocated to activities that directly benefit the poor. 14. On the other hand, the staff is aware that Uganda's PEAP is still in the process of revision. This on-going process will provide an opportunity to strengthen the PRSP in certain  - 6 - areas, notably the linkage between budgetary resources, outputs, and poverty reduction outcomes. In the PRSP, the government has identified a restricted number of outcome indicators, covering income poverty, educational achievement, health outcomes, nutrition, and fertility. It also specifies a limited set of output indicators, which are to be achieved during the current budget cycle. In the view of the staff, further work is needed here. Clearer links need to be established between these outputs and the outcome objectives that have been set. And more information needs to be provided on the relationship between outputs and needed budget provision. To date, these connections between outcomes, outputs, and budget are implicit in the sector strategies, which underpin the MTEF. In the view of staff, these links need to be strengthened and made more explicit. It should be noted, however, that the government is conscious of this, and intends to build on the work done to date. This is explicitly stated in the revised PEAP document. 15. To establish the links between budget and outputs, the PRSP sets out estimates of the fiscal costs associated with the interventions to be undertaken to attain the poverty reduction objectives. However, it must be noted that in some instances these cost estimates are not very detailed or robust; moreover, not all interventions have been costed. The government recognizes this fact, but is constrained by limited information and analysis; as more information becomes available, these costs are expected to be further refined. Moreover, beyond the three-year MTEF period, it is difficult to be precise about the fiscal costs of public sector intervention. However, as the PRSP notes, costings have been prepared for roads, water, education, health, and pay reform. These costings are sufficiently robust for the purpose of preparing the budget for 2000/01. Analytical work is continuing to enable the costings to guide inter- and intra-sectoral allocations. In other sectors such as agriculture and law and order, costings are to be developed alongside the reform of service delivery. Work is also in progress to relate the aggregate costs to resource availability beyond the three-year MTEF, although uncertainty about GDP growth, revenue performance, exchange rates, and external inflows make absolute precision impossible. 16. The World Bank is currently discussing with the government the assistance needed to refine the costing procedures of the sector strategies, which underpin the MTEF. It should be emphasized that these costing exercises are an integral part of the MTEF process, and the Ministry of Finance and Economic Planning is currently working with line ministries (and the Bank) to strengthen the budget process through better and more explicit costings. The PRSP clearly frames the poverty reduction interventions within the government's MTEF. The envisioned MTEF is consistent with sustained macroeconomic stability and the framework fully reflects the priorities emerging from the PRSP. As the costings of the poverty eradication program are refined further, the government will need to ensure that the MTEF evolves over time consistent with these requirements. 17. Similarly, the PRSP correctly notes that raising the pace of growth in Uganda is needed to achieve the income poverty target of the government, and that this will only occur if there are improvements in the educational attainment of the population, the depth and strength of financial institutions, and the improvement of the legal framework, especially the enforcement of contract law. The PRSP demonstrates clearly the progress made with respect  - 7 - to the first of these, but does not specify clearly the steps that the government intends to deal with the other two important issues. This is important as the success or failure of the poverty reduction strategy hangs on the development of the Ugandan economy. 18. The government has established a planning cycle for its PEAP, with the two-yearly Poverty Status Report (PSR) monitoring progress, and informing future revisions to the strategy. The staff considers that there will be sufficient data and analysis to monitor progress and to inform the 2001 PSR, which will report on such progress. Such monitoring will also embrace succeeding rounds of the UPPAP, which will provide complementary qualitative data on the PRSP achievements. However, the PRSP does not establish the precise institutional arrangements for such monitoring, nor does it provide a clear schedule of surveys and other reporting mechanisms which will ensure that the PSR for 2001 will have the needed information to make an assessment of progress. 19. In the view of the staff, the PRSP should also outline an agenda for further analytical work to inform policy and future revisions of the PRSP. Examples would include updated assessments of the benefit incidence of public spending, more detailed poverty maps as a guide to district level planning under the decentralization process, additional work on the human development goals of the PRSP, and follow-up Service Delivery Surveys. The government has agreed that this work should be done in close cooperation with Ugandan institutions, NGOs, and the donor community. 20. There are clear downside risks to be taken into account in the implementation of the poverty reduction strategy. The PRSP mentions the effect that deteriorating terms of trade might have for growth and poverty reduction. The medium-term revenue projections are more conservative than those presented to Executive Directors during the discussions of the current annual arrangement under the PRGF. The less optimistic outlook reflects the impact of the downward revision in the revenue projection for 1999/2000 arising from a shift in the composition of national expenditure away from imports, which is not projected to be reversed in the medium term. The projections also exclude any potential efficiency gains that could be realized through improved tax administration, which could amount to 0.3 percent of GDP a year. However, the projections also exclude the impact of any further reduction in petroleum excises or taxes on other imports. The PRSP could usefully highlight the measures the government intends to implement to strengthen tax administration (fully articulated in the government's MEFP), which will be crucial to the sustainability of its expenditure program. Institutional weaknesses are also an issue. The quality of social service delivery is directly dependent upon the success of the decentralization program and local government capacities. In this regard, good governance, which is most likely to affect service delivery, is a particular concern. The staff believes that the PRSP adequately addresses this issue but that it would benefit from a greater prioritization of measures to improve governance and accountability to ensure that the government's objectives are compatible with its capacity for implementation. The key to success in the view of the staff lies in the implementation of institutional changes that the PRSP calls for. Institutions which encourage good governance, private sector investment, and a more effective delivery of public services need to be strengthened. The failure to do so represents the greatest risk to the strategy.  - 8 - IV. CONCLUSION 21. In the staff s view, the Uganda Government's poverty reduction strategy paper fully meets the requirements for linking debt relief and poverty reduction set out in SM199/293 (12/13/99), SN/991290, R99-241. It presents clear objectives, which are set within a coherent program of poverty reduction, and is grounded in a careful assessment of poverty characteristics and trends. This program is consistent with Uganda's macroeconomic, structural, and social policies. The PRSP and the programs and policies underpinning them have been and will continue to be developed through a broad-based, transparent consultative process. The government is committed to regular monitoring and updating of its poverty strategy in light of progress in combating poverty and has identified a number of indicators that will be used in this process. In these on-going processes, any weaknesses will be addressed. In the staff s view, the PRSP strategy provides a strong platform for the design of Fund and World Bank assistance programs. The staff notes however that some details of the strategy, in particular, costings of poverty-reducing measures and the links to the macroeconomic framework, remain to be fleshed out. The authorities plan to do this in the future. Uganda: Key Bank Events, March 2000-June 2001 Event Board Date Finalization of PEAP/PRSP May 2000 MTEF/PER launch May 2000 Privatization and Utility Reform Project June 2000 CAS Board discussion June 2000 Agriculture Extension Project September 2000 Public Sector Capacity -Gaps December 2000 PERC-Service Delivery Improvement Credit January 2001 Rural Development Strategy-ESW March 2001 Roads II Project June 2001   Poverty Reduction Strategy Paper UGANDA'S POVERTY ERADICATION ACTION PLAN SUMMARY AND MAIN OBJECTIVES Ministry of Finance, Planning and Economic Development Kampala March 24, 2000   Contents 1 Introduction .....................3 Uganda's planning framework ......................3 The revision of the PEAP ......................6 2 National vision and overall goals .8 Reducing absolute income poverty: .8 Raising educational achievement of Ugandans .9 Improving the health of the people .10 Giving voice to poor communities .12 3. The Poverty Eradication Strategy .13 Creating a framework for economic growth and transformation ..13 Good governance and security .14 Actions which directly increase the ability of the poor to raise their incomes. 15 Actions which directly improve the quality of life of the poor .17 4 Medium- and long-term expenditure implications of the PEAP .18 The Medium-Term Expenditure Framework .19 Using the PAF to prioritise public expenditure .19 Poverty priorities and the PAF .20 Additionality .21 Accountability of PAF resources .21 The overall allocation of expenditures within the MTEF .21 Intermediate output targets in the medium-term .24 Long-run targets and costings .24 Long-run resource availability .25 5. The Monitoring Strategy .27 Annex Table 1: Goals, targets and indicators in the PEAP 2000 .29   1 Introduction This paper is a synthesis of the main features of the Government of Uganda's Poverty Eradication Action Plan (PEAP). The PEAP has guided the formulation of government policy since its inception in 1997, and is currently being revised. Under this plan, Uganda is being transformed into a modern economy in which people in all sectors can participate in economic growth. This implies a number of conditions: * The economy requires structural transformation, including the modernisation of agriculture, the development of industries which build on demand and supply linkages from agriculture, and continued institutional development in the legal and financial sectors. * Poor people must be able to participate in this growth, both by expanding smallholder agriculture and by increasing employment in industry and services. * Economic growth must be sustainable, high quality and broadly based. * The non-material aspects of poverty must be addressed; participatory studies have shown that insecurity, illness, isolation, and disempowerment are as important to the poor as low incomes. Uganda's Poverty Eradication Action Plan (PEAP) is established on four major pillars: * Creating a framework for economic growth and transformation * Ensuring good governance and security * Directly increasing the ability of the poor to raise their incomes * Directly increasing the quality of the life of the poor. The revision of the PEAP in 2000 draws on the progress made since 1997, including the development of sector-wide approaches, the participatory research carried out by the Uganda Participatory Poverty Assessment Project (UPPAP), the constraints identified in the Poverty Status Report, and the development of costings of public actions and monitorable indicators in key, poverty-oriented sectors. It will also place a greater emphasis than the 1997 document on the actions which promote private sector development and therefore contribute indirectly to poverty-reduction. The revised PEAP is Uganda's Comprehensive Development Framework. Uganda's planningframework There have been a number of initiatives to strengthen the planning process in recent years. This includes major consultative exercises concerning Uganda's long term goals and objectives, such as Vision 2025, describing national aspirations, and the 1997 Poverty Eradication Action Plan as a national planning framework to guide detailed medium term sector plans, district plans, and the budget process. In turn, detailed sector-wide plans and investment programmes have reached varying stages of completion, set within an overall medium term expenditure framework. A programme of strengthening district capacity to prepare medium term expenditure frameworks is also underway. The modem approach to planning involves ensuring that the right framework has been established to enable effective programming, implementation and monitoring. Chart I describes the flows and relationships between different plan/policy processes in Uganda. The most important point to note is that these elements interact in an ongoingprocess. Uganda's over-arching national planning document is the Poverty Eradication Action Plan, signalling poverty eradication as the fundamental goal of the Government. Chart I shows the relations between the PEAP and other plans. The PEAP is not a blueprint for sector activities. It 3  Chart 1: Overview of planning I information flows VISION 2025 POVERTY |.., ERADICATION ACTION PLAN ~~~~~~~~~~~~~~~~~~~~~~~~....... '''''',...... ::'''-. ,. ...,-. . ... L programmes a SECTOR PLANS | . .....LAS . . . Resu'ts of pai lof utory [GO programmes i M monlioring r ~ ~ ~~ L ocal Govt r--------- ---------a I Term Tr I Privat, sectorExpenditureExeItr [intiatives FrameworkFrewk r3dg.t Speech S larTB I Annual Budget District Budget --f Civil Society Quick guide to planning processes Vision 2025: an overview of long term goals and aspirations by the year 2025 The PEAP: the national planning framework on which to develop detailed sector strategies Sector Planning: technical specifications of sector priorities, disciplined by hard budget constraints District Planning: implementation plans for sector strategies based on local priorities / needs MTEF: annual, rolling 3 year expenditure planning, setting out the medium term expenditure priorities and hard budget constraints against which sector plans can be developed and refined District MTEF: setting out the medium term expenditure priorities and hard budget constraints Against which district plans can be developed and refined | Annual Budget & District Budgets: annual implementation of the three year planning framework Donor; NGO; private sector: participating and sharing information / ideas in developing sector plans and budgets Participatory processes: bottom-up participation of districts in the planning and monitoring process, as well as participatory poverty assessments, providing essential feedback on progress towards poverty eradication goals | 4  provides a framework for the development of detailed sector plans and investment programmes. Implementation of the PEAP demands sector-wide programming to determine sector objectives, outputs and outcomes expected from sector expenditures, and the activities which the expenditures will fund in order to achieve the desired outputs and outcomes. Thus the 1997 PEAP has guided the preparation of detailed sector plans. Capacity constraints within line ministries, which have been a serious limitation in sector planning, are being overcome by support from our donor and NGO communities in a spirit of partnership and teamwork. In recent years, major advances have been recorded in production of the Ten Year Road Sector Development Programme, the Education Strategic Investment Plan and the Health Sector Plan, and the Plan for the Modemisation of Agriculture. Also underway are plans for the energy sector and the justice sector. Eventually all sectors will be covered by up-to-date, resource constrained sector plans and investment programmes which focus on achieving the goals of the PEAP. In turn, the PEAP and the sector plans set the framework for preparation of district plans (although these are still at an early stage of development). Under Uganda's decentralised system of governance, the local authorities are responsible for determining the implementation plan for sector programmes based on local priorities. Involvement of communities in the planning framework is also being strengthened. Under the Uganda Participatory Poverty Assessment Project (UPPAP), the second phase will include dissemination of the perspectives of the poor in order to help guide policy at both national and district levels, and there will be further work in nine pilot districts to enhance community- level participatory planning and monitoring capacities. It is important to note that the relationship between both the PEAP and sector plans, and between sector and district plans, and between district and lower local council plans, is an iterative one. The PEAP sets the framework for other plans, but is also a product of those plans. For example, the current PEAP revision reflects the policy statements made in various sector plans, and tries to balance the sector objectives within a national framework. In turn, revisions of sector plans should take note of national priorities and constraints as outlined in the PEAP in refining their own sector strategies. The National Planning Authority, according to its mandate in the Constitution, will have the role of ensuring that the different plans are consistent. The same principle applies to the relationship between sector and district plans. While medium term plans establish a policy framework and desired outputs and outcomes, they are meaningless unless disciplined by hard budget constraints. Therefore another critical element of the planning framework is the medium term expenditure framework (MTEF). Since 1992, MFPED has been developing an MTEF, which is presented to Cabinet as part of the annual "Budget Framework Paper" (B3FP), covering three fiscal years. Preparation of the annual BFP includes detailed discussions with sector working groups each year to monitor performance of current programmes and projects. These discussions identify implementation bottlenecks, inefficiencies in existing operations, and potentially unsustainable imbalances in the size of the recurrent and development programmes. The discussions also take account of any upcoming policy initiatives in order to ensure that all new policies are comprehensively costed to reveal the full extent of their fiscal implications, and in order to propose how the Government's expenditure programme can be adjusted in light of new policy priorities, both within and between sectors. The important point is that, in the medium term, public resources can be redeployed in accordance with changing strategic priorities; it only requires development of the capacity and willingness to reprioritise spending needs and reallocate expenditures in a disciplined way. More recently, there have been attempts to broaden the consultation of the BFP process by increased discussion with donors, especially on the sectoral priorities of Government expenditure and on the consistency of Government assumptions regarding external financing 5  with actual donor financing plans. Steps are also being taken to involve civil society in the consultation process. An abbreviated version of the BFP (the version that goes to Cabinet before the expenditure allocations are approved by Cabinet) is published in the annual "Background to the Budget", and a detailed summary of the composition of expenditure for all sectors for the three year MTEF is published as an appendix table in the Budget Speech document. In 1999, a start was made on extending the BFP process to the districts, when training workshops were organised for the local Governments. Technical expertise is being provided by the central ministries to help district administrations to prepare their own three year expenditure planning frameworks consistent with resource availability. Government hopes that in due course this capacity can be extended to lower level local councils. The final element of the planning framework is an assessment of the impact of plans and budgets on civil society and beneficiaries, shown at the bottom of Chart 1 as "civil society". There are a variety of monitoring techniques, such as technical assessments of project/programme performance, statistical surveys, and more participatory methods to complement the traditional household survey methods such as the Uganda Participatory Poverty Assessment Project, which is attempting to bring the voice of the poor into national, district, and lower level planning. The results of monitoring activities provide feedback at all levels of the planning system. The revision of the PEAP While the basic principles behind the 1997 PEAP remain valid, there have been significant developments since its preparation both in outcomes - such as the huge increase in educational enrolments - and in the preparation of sectoral plans and the information available about poverty. Hence, to remain relevant, the plan has to be revised. It is envisaged that the revision of the PEAP will be a regular process carried out every two years, drawing on the results of the Poverty Status Report which will also be prepared every two years. Preparation of the revised PEAP remains a highly participatory process. Government recognises that the planning system does not consist of decision-making by a single institution at the centre. Rather, the system involves the interaction of a number of processes within an overall framework. As such, the process is much more dynamic and responsive to changes in policy priorities and/or resource constraints. The involvement of a much larger number of agencies in the planning process makes it important that planning linkages are clearly specified and understood. Substantial effort is being made to improve the partnership process in Uganda. As mentioned above, participatory approaches have increasingly been adopted both for sector plan preparation and monitoring and appraisal exercises. In revising the PEAP we have summarised and consolidated the results of previous consultations and research findings. The revised PEAP builds on an ongoing process of consultation. An initial "discussion draft" was circulated to a wide range of stakeholders to stimulate dialogue and debate. Later drafts incorporate the results of this wide consultation. In order to ensure reasonable levels of participation in preparation of the revised PEAP, the editorial team prepared a Participatory Action Plan. This includes consultations at the central government level as well as with local governments, with donors, with Parliamentarians, and with civil society, as well as the development of adequate feedback mechanisms to ensure that all stakeholders have contributed effectively to the drafting process. General consultative workshops: the revision process includes two major consultative meetings involving wide representation of stakeholders (politicians; ministries; donors; NGOs; private sector; civil society; urban and local authority representatives, media). The 6  objective of these workshops is to review current drafts and to provide detailed comments on policy issues arising from the drafts. Regional meetings for district officials: MFPED, working with the Ministry of Local Government, has already undertaken some regional work to explain the PEAP, UPPAP findings and budget issues. District officials will be presented with drafts of the revised PEAP at a series of regional workshops. As mentioned above, the CSO Task Force will also be promoting discussion of PEAP related issues within districts and communities. Donor consultations: in addition to participation in the general consultative workshops, the current draft has been presented at the Donor Consultative Group meetings in March 2000. Political consultation: In addition to attendance at the general consultative workshops, another meeting for members of all Parliamentary sessional committees was held in February 2000. This will be followed by further briefing sessions for specific sessional committees on issues relevant to their sector. Feedback mechanisms: It is very important to ensure that there is adequate time for written responses and contributions. Drafts have been widely circulated for the consultative workshops in February and April. There will be active follow-up, especially at the district level, to ensure that written responses are received from every district and sector ministry. Building on existing consultative processes: Issues raised during the revision process will not only be followed up at the general consultative meetings, but also raised through existing consultative fora (such as the sector working groups for the budget framework process; NGO consultative meetings; and regular donor meetings). 7  2 National vision and overall goals Poverty has many dimensions including low and highly variable levels of income and consumption, physical insecurity, poor health, low levels of education, disempowerment, a heavy burden of work or unemployment, and isolation (both social and geographical). Drawing on recent evidence (including household surveys and the Uganda Participatory Poverty Assessment Project), the PEAP highlights the many dimensions of poverty in the Ugandan context. It recognises the importance of increasing income to poor households, and places a high priority on eradicating income poverty. It also views ignorance as a particularly constraining feature of the lives of poor people, and is concerned to improve literacy and educational achievement among the population at large. Health is another central concern for the poor, and the Government has established clear goals for improving the health of Ugandans. It is essential that poor people have an effective voice in the design and implementation of public policy. The objective of the PEAP is to marshal public effort at improving these dimensions of household wellbeing. Reducing absolute income poverty: Income levels are low in Uganda, and large sections of its population are unable to buy the basic necessities of life-food, clothing, and shelter. Low incomes also lead to poor health and limited education. Consumption poverty levels are high. In 1997, 44 percent of the population was estimated to consume less than what is required to meet the basic needs of life. Low rates of economic growth, and the effects of civil disorder, are important historical factors causing poverty in Uganda. Incomes are also highly unequally distributed, which reduces the impact of economic growth on poverty reduction. At the level of the household, poverty is related to rural residence (specifically to living in the north or the east), to land shortage, to low levels of education, to being headed by a female widow or by someone old, and to limited access to markets. Unequal sharing of resources within the household reflects not only cultural factors but unequal access to education and physical assets such as land, in which women are disadvantaged. Poverty also reflects society-wide phenomena including insecurity, the quality of public services, the availability of productive employment, macroeconomic stability and the functioning of markets, health information, and the technical information available throughout society. But there are clear signs of improvement: * The proportion of Ugandans in consumption poverty fell from 56 percent in 1992 to 44 percent in 1997 * Average real household consumption rose by 17 percent over the period, and rose in every year (this is confirmed in the national accounts data). * The expenditures of the bottom 20 percent rose even more: those of the bottom 10 percent rose by 29 percent, and those of the of the next 10 percent by 23 percent over the period. * A major factor in the reduction of poverty was the benefit farmers gained from the increase in coffee prices, reflecting the combined effect of the boom in world coffee prices and the liberalisation policy, which passed the price increase on to farmers. * There was no systematic trend in inequality in the l990s. But although inequality is not definitely getting worse in Uganda, it would be desirable to reduce it. These data are encouraging: incomes are rising without a significant increase in inequality, and therefore poverty is falling. However, not all groups participated equally in the growth in incomes. Although poverty fell in all regions, average incomes grew faster in the regions which were initially better off. So although overall inequality did not increase, regional inequality increased significantly (Table 2.1). 8  Table 2.1: Household consumption gains by region Region Percentage ofpopulation in consumption Percentage growth in real poverty consumption 1992 1997 1992-1997 Central 45.5 27.7 21.4 West 52.8 42.0 15.9 East 59.2 54.3 11.0 North 71.3 58.8 14.4 The income group which benefited most dramatically was cash crop farmers, reflecting the increase in cash crop prices. Poverty in this group fell from 60 percent to 44 percent between 1992 and 1996 (Table 2.2). Income poverty among food crop farmers remained largely unchanged (falling marginally from 64 percent to 62 percent). Table 2.2 Household consumption gains by economic sector Sector of household Share of population Percentage ofpopulation in head (%/Y) consumption poverty 1992 1996 1992 1996 Food crop 47.2 44.2 63.7 62.2 Non-food cash crop 23.4 26.7 60.1 43.7 Manufacturing 3.7 3.3 44.8 27.4 Trade 6.7 6.9 25.9 19.4 Government services 6.8 5.5 35.0 28.0 Not working 4.3 4.9 60.2 63.4 Participatory data from the UPPAP indicate that many communities consider that poverty is increasing. This probably reflects two differences from the household survey. First, the participatory assessment was confined to poor, mainly food-producing communities, which gained the least from recent improvements. And the perceptions of poor people covered in the UPPAP were probably based on a broader view of poverty, encompassing more than simply low income. The Government of Uganda considers that absolute poverty must be eradicated. It has set itself the objective of reducing the headcount of income poverty to 10 percent of the population by 2017. Raising educational achievement of Ugandans The PEAP aims to raise educational achievement of the Ugandan population, especially among children of poor households. The significance of education is that it increases incomes and economic growth, and it offers an intrinsic benefit in itself. In 1997, the policy of free education for four children in every family was introduced and primary enrolment increased enormously from 2.6 million in 1996 to 6.5 million currently. Almost three million children entered the schooling system and the gross enrolment rate, using school-based data, rose to 128 percent in 1997 and 145 percent in 1999. Participatory evidence clearly shows that this increase is greatly appreciated by poor people. 9  These data show that the main issue in primary education is no longer increasing quantity, but maintaining quantity while enhancing quality. It is generally agreed that the quality of education in Uganda declined seriously between the mid-1970s and the late 1980s, and the increased enrolment is now straining the system. While the 1998 National Integrity Survey found that 60 percent of parents were satisfied with the quality of their children's education, the UPPAP investigation found widespread concern with schooling quality among the poor communities contacted. This is borne out by more formal investigations of schooling quality. The heavily burdened primary schooling system cannot meet the immediate demands for classrooms, teachers, and teaching/learning materials. Educational policy thus faces two central challenges: first, how to keep the increased number of children in school: and secondly, how to ensure that quality is maintained and improved given the expansion in the system. Enrolment rates in secondary and tertiary education remain low, although they have increased in recent years. Total secondary enrolment rose from 336,022 in 1997 to 427,592 in 1999. The draft strategic plan for secondary education estimates that only 10 percent of the secondary school age population is in school and that only 6 percent of the poorest 25 percent complete secondary education whereas 22 percent of the best-off 25 percent do so. Whereas Uganda is now well ahead of most countries in Africa in primary education, it is behind the others in secondary education. Although current policy will be focussed on achieving sustainable universal primary education, the requirements of a growing modem economy will place increasing emphasis on secondary schooling, and such schooling is certain to figure prominently in future PEAP revisions. The Government of Uganda has achieved its objective of universal primary education. The challenge it now faces is to encourage children to remain in school, and to acquire relevant skills for adult life. This implies the following objectives: * Maintain universal primary school enrollment (including poor households) * Reduce drop out rates and raise completion rates * Raise the cognitive skills of primary school graduates (as reflected in results from the National Assessment of Progress in Education). Improving the health of the people Life expectancy in Uganda has been estimated at just 42 years in 1997 (World Development Indicators). This is exceptionally low, mainly because of the AIDS epidemic. Child mortality is high, though it fell significantly from 180 per thousand in 1989 to 147 in 1994. In addition to increasing mortality, illnesses such as AIDS and malaria incapacitate large numbers of people. Trends in AIDS incidence are presented in the Poverty Status Report; there is a marked fall in incidence in urban areas, where the range of prevalence rates in ante- natal clinic attenders in six urban centers fell from 12-28 percent in 1991 to 7-15 percent in 1997. In rural areas there is no clear trend. Illness is a dimension of poverty which affects all income groups in Uganda, although it affects the poor particularly badly. Health outcomes depend on at least six factors: incomes, education, information, health services, water supply and sanitation. Studies of household data in Uganda have shown that both education and specific information about the causes of illness significantly reduce child mortality. For instance, one study (using 1992 data) found that if a mother has good information about malaria and diarrhea, this reduces the under-five mortality of her children by 0.045, compared with the overall mortality rate of 0.18. The same study found that child mortality was much more strongly related to education than to incomes. Mothers in the top expenditure quartile had lost almost the same proportion of their 10  children as mothers in the bottom expenditure quartile, but child mortality dropped at every level of maternal education and mothers with further education had only a quarter as high a rate of child mortality as mothers with no education. More recent data suggests that the link between incomes and mortality has grown stronger (Table 2.3). Between 1988 and 1995, while under-three mortality fell by 6 percentage points for the poorest 20 percent, it declined by almost 60 points for the richest quintile. Table 2.3 Under-three mortality by wealth quintile 1988 1995 Poorest quintile 188.5 182.5 Second quintile 163.9 154.5 Third quintile 184.9 168.1 Fourth quintile 180.6 134.3 Richest quintile 157.6 99.7 Source: Sahn et al (1999) Adult mortality may be more powerfully affected than child mortality by income and access to curative services. The most commonly named consequence of poverty in the UPPAP study was ill health, and the third most commonly named was death. It may also be more powerfully affected by the presence of health services, especially for maternal mortality. In the case of AIDS, cultural factors interact with poverty. In some parts of the country, single women cannot get access to land; finding a partner then becomes a matter of survival and people in these circumstances take risks which they would otherwise avoid. A World Bank study has developed projections of under-five mortality in Uganda. Using international data, it has been shown that child mortality responds to the effects of technical progress in preventive and curative care over time, and to female education and income growth within the economy. Using relationships estimated using international data, the following projections are derived: Table 2.4: Projections of Child Mortality in Uganda, 2017 Child mortality in 1995: 160.2 Child mortality in 2015: assuming time trend alone 118.9 assuming increased female education 117.6 assuming female education and 3% per capita income growth 110.2 assuming female education and 5% per capita income growth 85.2 These projections show that child mortality could be halved by the end of the period. However, there are three caveats: * the impact of female education may be underestimated, especially given UPE. * AIDS will tend to increase child mortality more than these data suggest. * Most importantly, the best international performers-many of whom have been socialist countries such as China and Cuba-have achieved much faster improvements in health 11  outcomes. It is important to recognize that energetic public action can produce very fast improvements in health even at low income levels, as the examples of China, Cuba and Sri Lanka show; Uganda's primary education enrolment, though not its health status, is now much better than most countries at its income level. The lessons suggested by these countries include the enormous importance of getting simple health messages out to the population, and the importance of community-level management using very cheap personnel sometimes known as 'barefoot doctors'. The very strong emphasis on preventive health messages in the minimum package is an attempt to reorientate the health system to maximize its effects on health outcomes. Improving the health of the Ugandan population is a priority objective of the Government of Uganda. The Health Sector Strategy sets targets of reducing child mortality from 147 to 103 per thousand, maternal mortalityfrom 506 to 354 per 100,000, to reduce HIVprevalence by 35%, reducing the totalfertility rate to 5.4, and reducing stunting to 28% by 2004/5. Giving voice to poor communities Poor people suffer directly from being disempowered. Powerlessness, described as inability to affect things around one, was reflected in the findings of UPPAP. The National Integrity Survey also found that 40 percent of the users of public services had to pay bribes. Such experiences are not only materially impoverishing; they are alsodemoralising. More broadly, people experience frustration when they cannot perceive their influence over public policy. UPPAP reported, for instance, that poor people saw no effective mechanisms to hold service deliverers accountable. The Government of Uganda aims to implement further administrative and political reforms which will increase poor people 's control over their own lives and the policies and services which affect them. 12  3. The Poverty Eradication Strategy The overall poverty eradication strategy is based on the following principles: * The public sector's role is to intervene in areas where markets function poorly or would produce very inequitable outcomes. * Where the public sector intervenes, it should use the most cost-effective methods, including the use of NGOs for service delivery where appropriate. * Poverty-eradication is a partnership and should involve the closest possible integration of the efforts of government with its development partners. * All government policies should reflect the importance of distributional considerations, of gender, of children's rights, and of environmental impacts. * Each area of public action will be guided by the formulation of desired outcomes and the designs of inputs and outputs to promote them. Strategic public action for poverty eradication is established on four pillars: * creating a framnework for economic growth and transformation; * good governance and security; * actions which directly increase the ability of the poor to raise their incomes; * actions which directly improve the quality of life of the poor. It is important to note that these four elements interact. For instance, although primary education is discussed under 'quality of life', it also has implications for all the other three goals. The distinction between the goals helps to focus attention on the actions which most directly affect poverty, but the interactions between the objectives need to be borne in mind. Creating aframework for economic growth and transformation. Economic growth and employment-generation are necessary conditions for poverty- eradication. The PEAP must be based on an understanding of the growth potential of the Ugandan economy, and of the public interventions needed to achieve it. .Work at Uganda's Economic Policy Research Centre has projected the growth of incomes and investment over the next twenty years. The EPRC's model has three main components; an investment function, a balance-of-payments constraint, and a production function. Economic growth in the model is driven by three main factors; the accumulation of human and physical capital, and the shift of labour from agriculture to manufacturing, in which it is assumed to be more productive. Estimates of the coefficients are derived from a sixteen-country panel data set. The projections for Uganda include a low-case, based on existing trends, giving 5.5-6.5 percent annual growth in GDP over the period (giving a GDP per capita of $550 in constant prices in 2020). They also provide a high-case, based on an increase in the productivity of aid and the diversification of the productive structure. This yields 7-8 percent per annum growth, giving a GDP per capita of $700 in 2020. This model therefore gives potential annual per capita GDP growth of between 2.5 percent and 4 percent. A very recent study at the World Bank takes a larger cross section to explain why growth rates vary across countries, and focuses more on institutional determinants. It identifies a number of factors which constrain growth, and assesses by how much economic growth could be raised if Uganda could close the gap in these factors compared with average values for developing countries (controlling for income levels). Some factors (such as trade openness and macroeconomic stability) are already better than average, and cannot yield higher future growth. Uganda must maintain the good performance of these indicators. But others-closing the gap in educational attainment, deepening financial institutions, and improving property and contract rights-can yield significant gains. The study estimates such 13  gains could produce an additional GDP annual growth per capita of 1.7 percentage points. Mean per capita growth of 3.2 percent per annum (which is what was achieved in the 1990s) could be raised to around 4.9 percent (assuming no deterioration in the external terms of trade). This translates into a GDP growth rate of 7.8 percent per annum. These studies show that GDP growth of the order of 7 percent per annum is feasible over the longer term in Uganda. But such economic growth will not be automatic. It will call for public action today to build the institutions needed for higher growth. Economic growth in Uganda requires a framework within which the private sector can expand. The first essential element is macroeconomic stability. Without this, economic growth will not be sustainable. The revised PEAP therefore includes a commitment to maintain macroeconomic discipline which has underpinned the fast economic growth of recent years. The second key element is setting appropriate macroeconomic incentives. This involves economic openness, which encourages exports and labor-intensive investments. The future for Ugandan industry is not reliance on a wall of high tariff protection-which encourages capital-intensive investment which does little for employment-but open competition in a market which is being expanded by rising incomes from agricultural modemisation. Thirdly, the framework for economic development also includes the equitable and efficient collection and use of public resources. On the revenue side, independent research has shown that recent tax reforms, including the introduction of VAT have made the incidence of taxes more progressive. Local taxation, however, may need review in order to make it more progressive. The use of the savings made available by external debt relief for poverty- reducing purposes and the development of a sound strategy for external borrowing are essential. On the expenditure side, the Poverty Action Fund has been used to reallocate expenditures to directly poverty-reducing services - primary education, primary health, agricultural extension, feeder roads. Equalisation grants are gradually being introduced; these are designed to make the delivery of services more equals across the country. The aim is that a poor woman in a remote rural area should be able to demand the same standard of service from the public sector as a man in the most affluent urban setting. The budgetary reform under the MTEF is central to implementing the PEAP. Finally, in order to promote economic transformation, the constraints on private sector competitiveness need to be removed. Surveys of business people in Uganda have shown that they face severe constraints on their operations. Infrastructure is a major constraint; firms' experience of power cuts significantly reduces their investment, and the development of internal markets is impeded by the limitations of the road network. Hence the sector-wide transport strategy and the ongoing process of utility reform are key. Another constraint is the difficulty that business people experience in enforcing contracts; this will be addressed by the programme of commercial justice reform which the government is beginning. The weakness of the financial sector is also a serious constraint. Reform of these sectors is essential for the development of the private sector. This is a poverty issue, because the expansion of formal employment is a central part of the strategy. A crucial component of the PEAP is accelerating economic growth. The actions outlined above can be expected to raise GDP growth performance to a potential as high as almost S percent per capita per year. Good governance and security Good governance is increasingly recognised as a prerequisite to economic growth and development. In Uganda, consultations with the poor have shown that insecurity is among their most pressing concerns. Work by the Human Rights Commission, the Law and Order Sector Working Group and the Governance Action Plan project has identified the main 14  priority areas in this sector. Conflict resolution and effective support to conflict-afflicted areas are essential. Armed conflict has been a decisive factor in the impoverishment of the North and the East. In 1999 the internally displaced population of Uganda is estimated at 622,000, and in addition insecurity affects many people who are not actually displaced. So the successful resolution of conflicts is a necessary part of poverty-eradication. The democratisation of Uganda has been pursued in a context of decentralisation. The process involves the transfer of responsibilities to district level. Participatory work has shown that the most highly appreciated level is the Local Council I or Village Council (LCI), the level which is closest to the people. The implications of decentralisation for ministries of central government have been reflected in the government restructuring, but the extent to which they are now ready to fulfil their new role needs to be assessed. Good governance involves making public expenditure transparent and efficient. Many reforms have been undertaken to make it harder to misuse public funds with impunity, including the establishment of the Ministry of Ethics and Integrity and the design of a new regulatory structure for procurement. Service delivery on the ground urgently needs improvement, as various surveys have shown. This is to be addressed by the introduction of results-orientated management, by pay reform designed to increase and simplify public sector remuneration, and by strengthening bottom-up accountability; communities must be able to hold service deliverers accountable through the Village Councils. Law and order is being addressed by the introduction of a sector-wide approach in which reforms proposed for the criminal justice sector will be costed. The poor reputation of the police needs to be addressed by an improvement in service delivery. The relatively good reputations of LDUs and LC courts can be built upon. Public information is central to good governance and innovative methods of disseminating information should be explored by inter-sectoral cooperation. The special needs of the disabled require a community-based approach which deserves priority. Disaster management, which includes the handling of drought, floods, earthquakes and conflict, requires both preparedness and response; the recently established Ministry within the Prime Minister's Office has prepared a national strategy. Actions which directly increase the ability of the poor to raise their incomes Recent empirical work (mentioned above) has established that GDP growth rates of over 7 percent per annum are feasible for Uganda, providing the needed public actions are taken. What does such growth mean for household income and poverty? The Government has prepared projections for GDP growth and other key macroeconomic variables. The model forecasts real GDP and real per capita private consumption up to fiscal year 2019/20, on the basis of a national accounts format. In these scenarios private incomes grow less fast than Govermnent income. As a result, private consumption growth is slower than GDP growth. In real terms, consumption per capita grows by 3.2 percent per annum for the high projection and 2.5 percent per annum for the low one. How much poverty reduction are such consumption growth rates likely to yield? Taking the structure and distribution of income (measured by household consumption) as given in the 1997 Poverty Monitoring Survey, an assessment can be made of the effect of such growth on income poverty. If we assume that every Ugandan household experiences per capita income growth of 3.3 percent per annum, the income poverty headcount would fall to 10 percent by 2017. The MOFEP higher growth scenario (a growth of household consumption of 6.2 percent per annum, or 3.3 percent in per capita terms) is therefore consistent with the poverty goal of the PEAP, so long as such growth is distributionally neutral (all households benefit proportionately). 15  Not all sectors, however, will experience such high growth. Taking past experience as a guide, a growth rate of 6.2 percent in aggregate consumption might involve agricultural incomes growing at only 4.7 percent per annum (with services and manufacturing growth being respectively 7.9 percent and 12.4 percent). If households are locked in their sectors of employment (as reported in the 1997 household survey), those employed in agriculture would experience slower income growth. We estimate that in this limiting case, headcount poverty would only fall to 22 percent, even if aggregate household income growth were 6.2 percent per annum. Low agricultural growth constrains the poverty reducing impact of economic growth. These conditional projections of potential poverty reduction under the Gvovernment's assumptions for economic growth highlight the need for more targeted interventions, the effect of which would be to accelerate the incomes of the poor directly. Two main lessons emerge: first, poverty reduction calls for higher agricultural growth rates; and non-farm employment must be increased in the rural areas where most poor people live. Most Ugandans are self-employed, mainly in agriculture. This gives the Plan for the Modemisation of Agriculture a central role in poverty-eradication. Despite the constraints of limited technology and market access, the potential of raising agricultural incomes is considerable. The PMA identifies six core areas for public action in agriculture: research and technology, advisory services, education for agriculture, access to rural finance, access to markets, and sustainable natural resource utilisation and management. Employment outside agriculture can be promoted by microfinance, advisory services, and vocational training. Feeder roads remain a central priority as in the 1997 PEAP, since when maintenance expenditure has tripled. Labour-intensive methods have been found to be financially cheaper than other methods of road-building and will contribute to employment generation. Research on land shows considerable inequality, often resulting from administrative and political factors more than the operation of the market. The Land Act is designed to strengthen the land rights of the poor. Women's land rights need to be strengthened further; public sensitisation for the purpose of the Land Act is needed: a cost-effective structure for land administration is needed; and the Land Fund needs to be operationalised, targeting the landless poor. The restocking programme for rural livestock has the potential to reduce poverty by restoring economically valuable assets, provided mechanisms are identified to target the poor. The Government is establishing a new regulatory and supervisory structure for microfinance in order to increase poor people's access to financial services. The Government has withdrawn from the provision of capital for credit but will still provide support forcapacity- building. Publicly supported research is coordinated by NARO. Research is to be decentralised, and stakeholders are to be involved. The appropriate mix between national and international research needs consideration. The potential benefits of publicly provided advisory services vastly outweigh their costs. Strategy is now being reviewed. The advisory service must address issues relevant to poor farmers, using ideas developed by NGOs for low-input technologies which the poor can afford. The services need to address productivity-enhancing techniques for farmers at different levels of resources, drought-resistant crops where needed, nutritional issues, marketing, storage and processing, and soil-conservation. Livestock, fisheries and agroforestry will also be covered by the advisory services. The management of markets is a private sector role under the PMA. The public sector has a role in ensuring that market access is affordable for vendors, in improving access to market information throughout the country, and in formulating policy on genetic modification and on organic farming. 16  Sustainable resource use will be promoted by raising awareness, including the encouragement of communal initiatives to protect common property resources. Forestry needs to be promoted by a mixture of public protection and investment in private forests. Valley dam schemes will be reviewed; this is an important priority for addressing the poverty of the Karimojong and the insecurity associated with cattle-rustling. Energy for the poor will be promoted by encouraging the use of more efficient cooking technologies and by smart subsidies for rural electrification, which will encourage entrepreneurs to invest in power infrastructure in rural growth centres. This will make it easier for the rural poor to have their output processed, increasing their effective access to the market; it will also enable more households to gain access to electricity in their homes. Actions which directly improve the quality of life of the poor Human development outcomes in Uganda have been transformed by the introduction of free primary education for four children in each family, which has lead to a massive increase in enrolment. Primary education is a central element of the PEAP. Now that quantity has increased so much, quality is critical. Challenges include the implementation of low-cost classroom construction and the management of the gap between teachers and classrooms including the use of double shifts where appropriate, measures for bottom-up accountability, and the possibility of using school gardens to educate children about agriculture while also providing some food. In secondary education, a strategy is in draft. Targeting gifted children from poor backgrounds is a poverty issue. Health care is being coordinated by the new health strategic plan. At the heart of this is the minimum health package. Service delivery is being improved by a number of mechanisms including better remuneration and training, better infrastructure, and better accountability to consumers through village health committees. The pro-poor implementation of cost-recovery will require the successful identification of targeting mechanisms, perhaps geographically based. AIDS and population growth raise cross-cutting issues. Water and sanitation are being supported by major public interventions, with communities paying a small proportion of the investment costs and being responsible for the maintenance of the facilities. Community sensitisation on water-borne disease and on the need for maintenance is therefore critical. Adult literacy is likely to be made an element of PAF from this year; its benefits are potentially very considerable, as literacy has been directly found to increase agricultural productivity and evidence suggests it will also influence health outcomes. Housing is a private sector responsibility, but the state can encourage the availability of low-cost housing. 17  4 Macroeconomic stability, medium- and long-term expenditure implications of the PEAP Macroeconomic stability and the macroeconomic framework In the medium term (three years), Government's strategy for fighting poverty is reflected in the Medium Termn Expenditure Framework (MTEF) and the expenditure priorities which are incorporated into the MTEF. The MTEF is itself fully integrated into a macroeconomic framework which is designed to ensure low inflation of no more than 5% and to support rapid broad based real GDP growth of 7% per annum. (In the first year of the MTEF, 2000/01, inflation may be higher and growth lower than the medium term targets because of the lagged impact of the external terms of trade shock which Uganda suffered in 1999/2000). The exchange rate will continue to be market determined, with the Bank of Uganda intervening only to dampen excessive volatility in the exchange rate and to maintain net international reserves at a level which is consistent with the targets in the PRGF programme (these targets will be based on the objective of maintaining gross foreign reserves at a minimum of five months of imports of goods and non factor services). Macroeconomic policy will be accompanied by a deepening of structural reforms in key areas including the banking and financial system, public utilities and the transport infrastructure, which are aimed at removing key constraints to private sector growth, and reforms to improve the efficiency and quality of public services. The key linkages between the MTEF and the macroeconomic framework are via the domestic borrowing requirement and the projected net inflows of external financing. The MTEF is consistent with both the levels of donor support projected over the medium term, relatively conservative projections of domestic revenue mobilisation and domestic bank borrowing which is consistent with the monetary objectives discussed in the next paragraph. The increased expenditures on programmes and projects specifically targeted on poverty reduction (for example, expenditures under the Poverty Action Fund (PAF) are projected to increase from 2.9% of GDP in 1998/99 to 4.6% of GDP in 2000/01) are fully consistent with the Government's macroeconomic objectives. Increased expenditures on the PAF will be funded by increased donor support, including debt relief made available under the enhanced HIPC initiative, and by restraint in the growth of non priority expenditures. The overall fiscal deficit, excluding grants, is projected to rise from the programmed 8.1% of GDP in 1999/2000 to 9.7% of GDP in 2000/01, before declining to 8.7% and 8.2% of GDP in 2001/02 and 2002/03 respectively. Donor support, net of external amortisation, is projected at 10.4%, 10.1% and 9.3% of GDP respectively in 2000/01, 2001/02 and 2002/03, and will therefore more than cover the projected fiscal deficits, allowing Government to accumulate savings with the domestic banking system and the non bank private sector. Annex Table 2.1 refers. The medium term monetary objectives are to maintain a rate of growth of broad money (M2) of 15% per annum which is required to hold core inflation (which excludes food crop and fuel prices) to no more than 5% per annum. This rate of money supply growth is consistent with the projected increase in money demand given projected growth of nominal GDP (averaging 12.9% per annum) and a decline in the velocity of circulation of circulation of an average of 2.2% per annum. Private sector credit is projected to expand by 15% per annum in nominal terms. This will allow private sector credit to gradually increase as a share of GDP. The growth in the net foreign assets of the Bank of Uganda will be determined primarily by the objective of maintaining gross foreign reserves at a minimum of five months of imports. Consistent with these objectives, Government is projected to accumulate savings in the domestic banking system of Shs 14 billion (0.14% of GDP) in 2000/01, Shs 89 billion (0.81% of GDP) in 2001/02 and Shs 95 billion (0.77% of GDP) in 2002/03. Annex Table 2.4 refers. 18  The trade deficit (denominated in dollars) is projected to widen in 2000/01 because of the impact of the external terms of trade shock, which will depress export earnings. However the increase in the trade deficit will be largely offset by the projected rise in official and private transfers. As a percentage of GDP, the current account deficit (including transfers and FDI) will rise from the outturn of 4.1 % in 1998/99 to a projected 4.6% of GDP in 2000/01, before declining to 3.8% and 3.6% of GDP in the following two years. The capital account is projected to remain in surplus, which together with the debt relief provided under the HIPC and enhanced HIPC initiatives, will enable the Bank of Uganda to accumulate net international reserves of $58 million in 2000/01, $108 million in 2001/02, and $116 million in 2002/03. This is sufficient to maintain gross reserves at the target level of five months of imports of goods and non factor services. Annex Table 2.3 refers. Annex Table 2.1 summarises projected investment and savings. Public investment is projected at 7.4% of GDP in 1999/2000 and 7.8%, 7.3% and 7.0% in the next three years. Public savings are projected at 5.1% of GDP in 1999/2000 and 5.0%, 5.0% and 4.7% in the next three years. Private investment is projected at 10.3% of GDP in 1999/2000, rising to 10.5%, 12.8% and 12.9% in the next three years. Finally, private savings are projected to fall to 8.1% of GDP in 1999/2000, recovering to 8.7%, 11.2% and 11.5% in the next three years. The Medium- Term Expenditure Framework Those aspects of the PEAP which have implications for public expenditure will be implemented through the medium-term expenditure framework. This framework is presented to Cabinet as part of the annual "Budget Framework Paper (BFP)", covering three fiscal years. The objective of the MTEF is the design of all public expenditure by a clear analysis of the link between inputs, outputs and outcomes, in a framework which ensures consistency of sectoral expenditure levels with the overall resource constraint in order to ensure macroeconomic stability and to maximise the efficiency of public expenditure in attaining predetermined outcomes. Ultimately, these medium-term objectives need to be consistent with the longer-term objectives defined by the PEAP; so the PEAP will be used to guide reallocations of expenditure. The sectoral implications of the PEAP objectives are reflected in the design of sectoral strategies which in turn guide the expenditure allocations made each year under the MTEF. The MTEF is intended to guide all public expenditure including the use of resources committed by donors. For this reason, the Government is introducing a sector-wide approach wherever feasible, under which government and donors contribute to a common pool of resources used to achieve the sectoral objectives. The flexibility which this arrangement allows is essential to the efficient use of public expenditure,. because only in a sector-wide approach can the overall implications of a national programme within each sector be considered, and because a sector-wide approach can reduce duplications of effort by different projects and divergences of cost structure between projects and other public activities. Using the PAF to prioritise public expenditure The PEAP of 1997 drew particular attention to the need for increased expenditure on the delivery of those services which directly benefit the poor. It was recognised that in Uganda, as in most other countries, there could be a tendency to neglect the interests of the poor unless a conscious effort was made; this is one implication of the observation that powerlessness is one aspect of poverty. Since 1997, the institution of the Poverty Action Fund has been used to achieve the planned reallocations. The PAF has three essential elements for this objective. First, no expenditure is included in PAF unless its direct poverty benefits are clearly demonstrated. Secondly, the use of funds in the PAF is subject to particularly stringent 19  monitoring procedures in which civil society actively participates. Thirdly, the use of funds for PAF activities is clearly additional to the levels achieved in the 1997/8 budget. Most of the areas included in the PAF consist of service delivery which directly benefits poor people, rather than administration. In order to achieve the increase in spending on service delivery and on infrastructure, it is necessary to keep administration lean. Government will continue to endeavour to make its administrative elements as lean as possible and to avoid the proliferation of administrative structures which can impose serious fiscal costs. Poverty priorities and the PAF The PAF (summarised in Table 4.1) includes the most high-priority public expenditures from the poverty-eradication perspective. Inclusion of a particular sector or programme in the PAF is justified by the high economic and/or social retums to the form of expenditure, by the fact that a substantial proportion of the benefits of expenditure in that area are received by the poor, and by the priority which participatory work has shown the poor themselves attach to that area. Areas already included in the PAF include rural roads, agricultural extension, primary health, primary education, water supply, and equalisation grants whose purpose (defined in the Constitution) is to make the quality of service delivery more even across different districts. Within this group of services, the priority attached to water supply was increased as a direct result of the finding from participatory work that the poor themselves regarded water supply as a high priority. Areas which are being introduced this year include adult literacy. Table 4.1 Summary of PAF budget (bilion shillngs) budget projections 1999/2000 2000/1 2001/2 2002/3 Directly increasing incomes of the poor 52.9 50.1 53.8 59.4 Rural roads 24.5 30.5 32.9 37.2 Land Act 3 3 3.3 3.7 Agricultural extension 6.1 6.3 6.8 7.7 Micro finance/restocking 19.3 10.3 10.8 10.8 Directly improving quality of life of the poor 268 371.1 410.4 486.3 primary health care 28.2 51.1 70.1 92.1 water and sanitation 17.4 37.6 39.5 44.6 primary education 222.4 281.4 299.8 348.4 adult literacy 0 1 1 1.2 Studies for implementation of PEAP 0 1 1.1 1.2 Other district grants 2 12 13 14.4 Accountability 11.3 15.7 17.2 20.3 Total budgeted expenditure 334.2 449.9 495.5 581.6 The priorities embodied in the PAF will evolve as the PEAP is implemented and the economic and social structure of the country evolves. For instance, secondary education will become a higher priority as more students graduate from the universal primary education programme, especially from poorer backgrounds. Equally, there are areas of high priority 20  which are not included in PAF because their benefits for the poor are indirect rather than direct. The development of sectoral and intersectoral strategies such as the Plan for the Modernisation of Agriculture and the strategy for law and order and for social welfare will make it possible to identify more precisely spending needs for agricultural advisory services, environmental protection, basic legal and policing services, support for the disabled, vocational education, and strategic communications. Government priorities can therefore be expected to evolve as this analytical work is done. The regular revision of the PEAP will allow strategy to adjust accordingly. Most spending under the PAF is undertaken at district level. The main mechanism used to ensure that national priorities are observed at district level has so far been conditional grants. Over time, as planning capacity is built up, it is envisaged that the bottom-up setting of priorities by communities will become more important, reducing the need for top-down determination of priorities and allowing more scope for local diversity to be reflected in local expeniditure allocations. In the short run, it is envisaged that the proposed introduction of a non-sectoral conditional grant at subcounty level (LC3) will allow more flexible attention to local priorities. Additionality Govermment appreciates that development partners wish to ensure that the resources they commit to particular sectors lead to increases in the total resources committed to these sectors. Hence the presentation of spending plans in the PAF makes it clear that government and donor funds committed to the PAF are additional to the government's resources spent in the 1997/8 budget, which is being used as a baseline. On the donor side, we are seeing an increasing commitment by our development partners to the provision of budgetary support through the PAF mechanism; this is extremely welcome. It is therefore clear that far from making fungibility easier, the injection of budget support through the PAF mechanism allows a more transparent understanding of the additionality of donor resources than was ever possible with the funding of individual projects. Accountability of PAF resources As discussed above, the strengthening of accountability for all public expenditure is a central part of the overall objective of improving governance. Special measures have been taken to strengthen the accountability of the high-priority expenditures managed under PAF. Funds are released either as conditional grants to the Districts or through the development budget. Five percent of PAF resources are set aside for enhancing existing monitoring, accounting and auditing procedures. To enhance transparency, all releases of PAF resources are published regularly and are discussed at quarterly PAF meetings, chaired by the Government. A large number of donor agencies have been represented. Officers from the relevant line ministries and district level officials are invited to attend and report on implementation issues. Local and international NGOs are invited to attend in order to exchange information, discuss policy issues, and, where applicable, report on programme implementation and/or accountability issues. The media are also invited to these meetings in order to enhance accountability through sharing information with the public. The overall allocation of expenditures within the MTEF The MTEF is kept under constant review as macroeconomic events and the budgetary process unfold. In this sense, there is no 'final' MTEF. However, the current state of the MTEF 21  reflects the Government's best estimate of its spending plans over the next three years. Under the review of the Government's existing programme with the IFIs, the macroeconomic framework and the associated MTEF have just been revised and are fully consistent(see Annex Tables 2 and 3). A summary is provided in Table 4.2. It can be seen that the share of the programmes included under PAF in the government's budget has risen significantly since the introduction of the PAF in 1998/9, and will rise further as HIPC-2 resources are devoted to PAF programmes. By 2002/3, the share of PAF programmes in the government budget will have doubled since 1997/8 from 16.3% to 32.5%. Outside the PAF, the increase in the share of the roads sector is also considerable, and the share of public administration has fallen in line with Government priorities. The reallocation towards direct poverty-reduction has been achieved by focusing on the poverty impact of spending within as well as between sectors. A more detailed summary is provided in Annex Table 3. Note also that the PAF projections in Table 4.1 represent a subset of the MTEF presented in Annex Table 3 22  Table 4.2 Shares of expenditure in the MTEF Government budget and donor projects Government budget including budget support outturns outturns budget projections budget projections 1997/8 1998/9 1999/0 2000/1 2001/2 2002/3 1999/200 2000/1 2001/2 2002/3 0 security 15.3 19.8 15.1 14.6 14.6 14.7 10.8 10.4 10.5 10.7 roads 4.0 6.2 8.2 9.4 9.0 9.7 12.9 13.5 13.2 13.6 agriculture 1.2 0.9 1.4 1.3 1.2 1.2 4.0 3.8 3.8 3.7 education 26.4 26.9 26.7 27.5 26.9 26.8 20.7 21.4 21.0 21.1 health 6.8 6.7 6.5 7.1 7.8 8.6 11.0 11.2 11.7 12.2 law and order 9.2 7.2 6.8 5.8 5.7 5.8 5.0 4.3 4.2 4.3 economic functions and social services 3.3 4.0 7.7 7.9 7.6 7.7 15.6 15.6 15.2 15.1 public administration 25.8 21.3 19.7 16.9 17.3 15.6 14.4 12.4 12.8 11.6 interest 7.9 7.0 7.0 7.1 7.1 6.5 5.0 5.1 5.1 4.8 total (incl. contingency) 100 100 100 100 100 100 100 100 100 100 Memo: share of PAF programmes 17.5 22.7 .26.1 31.1 30.9 32.5 23  Intermediate output targets in the medium-term Under the MTEF, a number of sectoral working groups have been formed. Each group drafts a sectoral budget framework paper, which feeds into the national budget framework paper which is co-ordinated by MFDEP. These papers give a wide range of input, output and outcome indicators for each sector. For the purposes of monitoring the evolution of the PRSP, the following targets have been identified as performance indicators for the whole programme. They are considered to be achievable within the resource ceilings under the MTEF. The sectors selected reflect both the high priority Government attaches to these sectors and the relatively well-developed strategies available in these sectors. Table 4.3: PEAP monitoring indicators Education. 98/9 99/00 00/01 01/02 02/03 Average pupil-teacher ratio 68 58 48 45 45 Average pupil: classroom ratio 131 118 99 88 79 Average pupil-book ratio 6 6 4 3 3 Health 98/9 99/00 00/01 01/02 02/03 immunisation rates (DPT3) 35 % 45 % 60 % 70 % 80 % %of health centres with trained staff 33% 55% 61% 63% 65% Water 98/9 99/00 00/01 01/02 02/03 boreholes drilled 1060 1100 1280 1500 springs protected 900 900 800 700 shallow wells protected 1000 1100 1420 1700 Long-run targets and costings While the MTEF depends on a precise (albeit constantly evolving) set of projections for the next three years, the overall design of policy needs to take a longer perspective. For this we need long-term outcome targets, costings of the public expenditures needed to achieve these targets, and long-term projections of resource availability. Work on all three of these components is ongoing and will be reflected more fully in the final draft of the PEAP in May. But much has already been accomplished. Annex Table 1 provides a summary. Under the first goal of the revised PEAP, the creation of aframeworkfor economic growth and structural transformation, major elements of public expenditure will be main roads, commercial justice, power sector reform and tertiary education. The main roads programme 24  has been costed subject to a resource ceiling of $1500 billion over ten years. A recent update also provides costings for additional projects which would be justified by their rate of return in the absence of a resource constraint.In the long run, privatisation will transfer the need for major investment expenditures on power to the private sector; in the short run, there is a major project for the Owen Falls Extension to power capacity.. A programme for commercial justice reform has been costed at $8 million over five years; it is expected not to add to recurrent costs in the long run. For tertiary education, the strategy is yet to be defined and costed. In the governance sector, the long-run security needs are difficult to estimate. However, Government will aim to make its defence spending as efficient as possible and hopes to reduce the security burden by active participation in regional initiatives to resolve conflict. The costs of pay reform will be very significant; Government wishes to move to a holistic, transparent and simple pay structure with public sector wages equivalent to about 75% of private sector equivalents over a six-year period. Within the law and order sector, strategy will be defined over the next year; the review of the criminal justice sector has produced several policy initiatives, but costs and strategic priorities remain to be determined. Issues of significant fiscal implications include the size of the police force and the role given toLDUs. More work needs to be done on the costs of communication, which might be reduced by intersectoral cooperation. Under actions which directly enable poor people to increase their incomes, a new strategy for feeder road programme is being drafted. The costs of rehabilitating and maintaining the network have already been estimated. For actions under the Plan for the Modemisation of Agriculture, costs will be developed as these actions are concretised. However, some costings are available for extension, research and the provision of capacity building (not capital) to microfinance institutions. As the reform of the advisory services proceeds, its costs will become clearer. Environmental actions such as the protection of forests and wetlands need to be costed. The implementation of the Land Act is proving expensive, and consideration is being given to methods of reducing these costs. The rural electrification strategy focuses on 'smart subsidies' for private investment; the amount of subsidy needed to enable adequate private sector investment to achieve the 12% coverage target and, more important, to promote income-earning activities in rural areas will be estimated. Costings need to be developed for the promotion of improved cooking technologies. For vocational education, targets are defined in ESIP and have been approximately costed, but more work will be needed on the detailed costings. Under actions which directly increase the quality of life of the poor, a costing of the health strategy consistent with national delivery of the minimum health care package has been developed. However, the costing is to some extent resource-constrained and it would certainly be possible to use additional resources constructively. There is also an unconstrained costing for the AIDS programme, which would be implemented through the various sectoral programmes. For primary education, precise costings of achieving given targets are available and are constantly updated. In the case of secondary education, ESPI defines targets and a strategy is in draft; initial estimates of costs have been made. For water supply, a costing has been prepared to reach the target of the maximum feasible coverage by 2015. For adult literacy, the costs of a national programme have been developed. Long-run resource availability Long-run macroeconomic projections, described above in Section 3, are being developed to estimate the long-run availability of resources. There are four major uncertainties. First, revenue growth depends on GDP growth. Secondly, the share of revenues is intended to rise, but the speed at which this will be achieved in the medium term is hard to predict exactly. Thirdly, the foreign exchange rate will affect the domestic value of foreign inflows and will 25  have different effects on the effective deflator for different sectors of government expenditure. Finally, the level of external flows will be important. At this stage nothing definitive can be said about the overall relation between the priorities identified in the PEAP and the projected resource envelope. However, some initial estimates have been undertaken and it should be possible to give some estimates by the final draft of the PEAP in May. In any case, it must be emphasised that poverty reduction depends on economic growth; if there is a gap in the medium term between costs and resources, this is helpful information for the design of additional resource inflows, but it will not be used to justify taking risks with macroeconomic stability. It must also beemphasised that increasing the flexibility and efficiency of resource inflows by the shift from project aid to budgetary support may be as important in achieving the government's objectives as increasing the total volume of net flows. 26  5. The Monitoring Strategy The monitoring strategy of the PEAP is designed for two main purposes. First, it is essential to monitor progress in order to continually inform key agents involved in the process. Encouraging a two-way flow of information between beneficiaries, service providers and policy makers is an essential component of the PEAP. In this way, the design and implementation strategies can be continually modified to build on what works, and to avoid repeating mistakes. Second, the monitoring strategy will help to build accountability. Where targets are set, the Government will expect to account for its successes or failures in achieving them, though it is understood that these successes and failure sometimes depend on factors outside Government's control. Poverty monitoring involves a large number of institutions including the Poverty Monitoring Unit in MFDEP, the Uganda Bureau of Statistics, and the Uganda Participatory Poverty Assessment Project. Five aspects of the system are worth noting. First, the household surveys are being used to prepare high-quality estimates of trends in poverty and the published reports provide much useful information. There is scope for these data to be used more widely for a variety of studies; for instance, ministries could commission detailed studies of trends and determinants of service delivery, particularly among the poor. There is a need for an institutional mechanism to inform policymakers about the potential uses of the data and to provide incentives for the necessary work to be done. Second, the participatory work has shed light on numerous aspects of poverty in Uganda and has immediately influenced budgetary allocations on water supply and the priority given to improving security. It is planned to extend the work to all districts. Third, there is a need to develop indicators for performance in all sectors. This is being done by sectoral ministries under the MTEF, and the Poverty Monitoring Unit has also developed a list of indicators in cooperation with the districts. The matrix in Annex Table 1 gives an indication of progress. Fourth, the institutional provision for monitoring the PEAP is found in the preparation of the Poverty Status Report. This was first prepared in 1999, and is to be repeated in 2001 and every two years thereafter. It will synthesise information on recent poverty trends, and make recommendations on the poverty eradication strategy, to be incorporated in future PEAP revisions. The PEAP will also be revised every two years. Finally, there is a proposal for a Geographical Information System which would link existing sources of data and allow the spatial distribution of poverty to be studied in more detail. For this exercise, it is essential that the coming population census be completed on time. Census data not only enable detailed poverty maps to be compiled, but serve also to update the sampling frame of household surveys. Monitoring will be structured at three main levels. First, the monitoring of PEAPoutcomes. This will focus on progress in reducing income poverty, improving health, raising educational achievement and enhancing the voice and participation of the poor. Most of the information for such outcome monitoring will be drawn from household surveys and repeated exercises under the UPPAP. Secondly, the strategy will entail monitoring actions or outputs intended to achieve these outcomes. The intermediate output indicators which have been defined for many sectors (reviewed above), will be tracked on a regular basis. Data sources will include both sample surveys and data from management information systems. 27  Thirdly, there will be regular monitoring of the inputs required for action against poverty. This is to consist mainly the tracking of public expenditures on poverty reducing activities. Such tracking will include periodic estimates of the benefit incidence of public spending, and of the effectiveness of the sectors in getting funds to institutions which actually deliver public services. In some instances, such monitoring will also involve information on key inputs needed in the sector to deliver its services effectively-teachers and books in education, or drugs supplies in health care facilities. It will also include continued monitoring, and public debate, about the composition of expenditures. Annex Table 1 gives more information about indicators to be used in all sectors. The May draft of the PEAP will give more information about the methods of monitoring these indicators. 28  Annex Table 1: Goals, targets and indicators in the PEAP 2000. PEAP goal _Targets Costings Monitoring indicators Observations I Creating aframeworkfor econonmc growth and transformation 1. I Sustaining economic growth 7% GDP growth real consumption per capita national accounts real GDP/GNP per capita real GDP/GNP per capita with terms-of-trade correction Intermediate outcomes: national accounts investment/GDP savings/GDP real output by sector 'Green' national accounts Medium-term objective; not available in short term Investor/business confidence EPRC/World Bank surveys 1.2 Macroeconomic stability and 5% inflation Inflation incentives Real exchange rate misalignment Depends on model of equilibrium real exchange rate; Research Dept BOU has built a model. Effective rates of protection by Special studies needed: some sector studies being undertaken for tax ____ ____ ____ ____ ____ ___ _______ ______ __policy D ept 1.3 Efficient and equitable tax A higher ratio of tax to GDP in the Tax/GDP ratio system medium term Incidence of tax system, e.g. share Has been estimated for some taxes of taxes in expenditure by by individual researcher now at expenditure decile IMF 1.4 Debt strategyv Debt/GDP, debt service/exports Net inflows to public sector, on Permanent reductions in debt/GDP debt and in total can actually reduce rather than increasing net inflows, so necessaxy to monitor net flows as well. 1.5 Poverty focus of public Share of directly poverty-reducing Basically areas included in PAF expenditure service delivery in (a) government (b) total public spending Incidence of benefits of public Study of 1994 to be repeated expenditure by income group, periodically _____________________________ gender, region 29  PEAP4goal Targets Costings Monitoring indicators Observations 1.6 Financial sector reform real volume of credit to the private sector sectoral composition of credit to Credit to traders may be key for private sector agriculture margins between borrowing and lending rates size of branch networks 1.7 Infrastructure 1.7.1 Power Owen Falls Extension and support to UEB, $287 million: urban power, $25 million. No recurrent subsidy in the long run except to rural power (see below) 1.7.2 Telecommunications 1.7.3 Main roads According to 1999 update of Costings for constrained Condition of roads; length of roads SWG estimates for spending appear TRSDP: programme totalling $1.5 billion improved. to be lower than the costs of the constrained programme to include given in 1999 update; constrained programme, so all projects with NPV/Initial unconstrained programme would spending will have to rise in Financial Cost > 1.4 at discount rate require an extra $75 million of subsequent years to meet the of 12%: unconstrained alternative capital and some extra recurrent TRSDP targets. all projects with NPV>O at discount costs rate of 12% No distributional correction at all used in update; target could be modified for distributional correction 1.8 Commercial sector law reform $ 8 million dollar reform Popular perception of quality of programme proposed over five judiciary as in UPPAP. years; no subsequent increaese in Investor perceptions of functioning recurrent costs predicted. of legal system. 1.9 Specific actions for Expenditure on tourism promotion manufacturing and tourism may be considered 1.10 Tertiaiy education Access: increase in enrolment from No costing identified. Total enrolment in tertiary Administrative data probably 25,000 to 50,000 by 2003 of which education, and gender breakdown sufficient 40% female: access to districts Costs of increasing enrolment hard levelled and access to lower socio- to estimate when so much is now Enrolment by socio-economic economic groups increased.(ESIP). privately financed. group, and district of origin Use Household budget surveys Output: 8,000 government students at Makerere (MTEF paper) Costs of increasing access for poorer students need to be estimated. 30  PEAPgoal Targets Costings Monitoring indicators Observations Quality: 30% improvement in Completion rates Admin data completion rates and 90% employment rate post-qualification Post-qualification employment Household surveys or special (ESIP) studies; tertiary institutions could be required to monitor this themselves (would encourage career guidance of students) 2 Good governance and security. .. 2.1 Overall sector goals and human Public awareness about rights rights 2.2 Security . No costing for the army in the Casualties (military and civilian) Would require special studies: medium term has been identified, from military conflict. which is the best agency ? but a rough figure of 2% of GDP is being used.. Number of people displaced by conflict Living conditions in protected villages 2.3 Democratisation and No costing identified for capacity- Electoral turnout decentralisation building at district level, which probably needs to be streamlined across agencies 2.4 Transparent, efficient, and Proportion of high-level corruption poverty-focused public expenditure cases prosecuted Public perceptions on corruption UPPAP and Integrity Surveys give some evidence Incidence of misappropriation of public funds 2.5 Delivering efficient and honest Proportion of service users paying National Integrity Survey gives public services illegal charges estimates; use Service Delivery Surveys or insert question into Household Surveys 2.6 Law and order All costings in this sector to be Indicators across whole sector: Official figures subject to reporting reviewed this year, subject to policy Crime rates bias: also use questions in decisions. BFP gives some Size of remand population household surveys if available medium-term estimates. Average length of time spent on remand 31  PEAPgoal Targets Costings Monitoring indicators Observations 2.6.1 Criminal judiciary and Criminal justice reform 'likely to be Number of cases completed. prosecution many times' cost of commercials ector reform which is $8 million Size of case backlog over 5 years. Specific extra activities in short term costed in Average delay in bringing a case to BFP. court. 2.6.2 Prisons Costing to be developed. Projected Outcomes: Living conditions HRC is mandated to inspect spending is 13 billion shillings for including overcrowding, death prisons; what other agencies are 2000/1. rates, illness involved ? Extra resources may be available Inputs: spending per prisoner Need for special studies. from prison farms. Long-run size of prison population highly uncertain since (a) 65% are on remand (b) community service is being introduced (c) appropriate response to underage sex is under public debate 2.6.3 Police Target size of force to be reviewed No costing available. Projected Case clear-up rate (though this does Existing spending levels show that as part of law and order strategy. spending sh 54 billion 2000/1 rising not depend only on police). increases in force size are to 68 billion 2002/3; wages slightly potentially very expensive even at less than half. Improved barracks existing wage levels. PEAP should has been identified as priority and not include substantial force should be linked to improved expansion. service delivery. Increases in remuneration/living conditions need to be accompanied by improvements in service delivery and accountability. Public experience of service- Service delivery surveys, UPPAP delivery 2.6.4 Rehabilitation To be costed. Re-offense rates 2.7 Public information A mechanism for intersectoral Awareness of human rights and UPPAP cooperation on public legislation. communication is needed. Costing is difficult. Awareness of health information. DHS Awareness of entitlements and roles in service delivery Awareness of entitlements and roles in service delivery. 32  PEAPgoal Targets Costings Monitoring indicators Observations 2.8 Empowering vulnerable groups Costing under revision. Access of disabled people to Introduce questions into household necessary equipment surveys. Economic activity of disabled people to earn a living Number and living conditions of child-headed households. 3 Actions which directly increase the ability of the poor to raise their incomes 3.1 Poverty outcomes PEAP gives target for headcount of Poverty headcount Household surveys 10 percent by 2017 Per capita consumption of poorest 20% Proportion of households suffering severe income shocks 3.2 Rural transport 3.2.1 Rural roads District roads fully repaired and 1999 draft strategy gives costs of sh Km. of roads in good repair maintained by 2006 25 billion (99/00) rising to53 billion (05/06) Proportion of districts with more than 50% of roads in poor condition Average household distance from road in good condition 3.2.2 Other rural transport Some rural water transport is publicly provided; there is a proposal for further service in Kalangala. Ferry landing sites included in BFP. Railway subsdy being phased out. 3.3 Land Implementation of structures in Recurrent costs have been Poor rural households with no Land Act estimated at Sh. 19 billion rising to access to land Sh.27 billion by 06/7, with set up costs of Sh.22 billion. Revision of Act under consideration. Land Fund under consideration 3.4 Restocking livestock ____________________________ To be phased over time. ____Tobe_hasd_oer_ime 33  PEA4Pgoal Targets Costings Monitoring indicators Observtions 3.5 Agriculture, livestock, forestry, Costs for current system about 17 Agricultural incomes fisheries, food security billion shillings System to be revised. Real food expenditures (for food security, also catches some gender Other aspects of the PMA being aspects) costed, but this will take time. Crop yields Proportion of farmers with access to advisory services Compliance to environmental standards 3. .6 Rural and urban markets Any public spending should be Accessibility costed as part of the PMA Market dues paid. 3.7 Rural energy 12% rural electrification by 2010 Costs of 'smart subsidies' for Use of electricity at home. Public expenditure should be private investment to be estimated. . included in budget rather than Access to businesses using earmarked. clcctricity including food processing. Promotion of environmentally friendly energy may need reources; NEMA and MOE to collaborate 3.8 Rural communications No costing available 3.9 Employment and labour: 850 polytechnics and 100,000 Ballpark costing of 40 billion Enrolments and completion vocational education trained by 2003 shillings per year. Employment of graduates 3.10 Micro- and small-scale A costing was done in 1997 for a Access of entrepreneurs to advisory enterprises lean network of advisory services at services district level 3.11 Microfinance services Being examined under PMA Proportion of househlds using microcredit (currently low relative to demand) Proportion of hh with banik account Monetisation of economy 4 Quaity of life 4.1 Overall sectoral indicators See health documents: to be Life expectancy analysed in the WB's work on Child and infant mortality projections _ Maternal mortality 34  PEAPgoal Targets Cosdings Monitoring indicators Observations 4.2 Health care services Substantial costing exercise done. Immunisation coverage Proportion of HCs with staffing Most recent costing exercise based norms on attendance at relatively well- Proportion without stockouts equipped units. Includes full cost of Utilisation drugs; cost to the state is net of Perceptions of service delivery cost-recovery. Costings are Prevalence for HIV and malaria SDS and UPPAP resource-constrained. _______________________________ ~~~Special studies needed 4.3 Population control Decline in fertility rate, see Expenditures for service-delivery National Population Policy should be included in health sector 4.4 AIDS 25% drop in prevalence Expenditures for service delivery HIV prevalence should be included in health and other sectors 4.5 Water and sanitation 100% or maximum feasible' access Estimated at about 800 billion for Access to improved water source to safe water by 2015 safe water by 2015. (<0.5 km.) Also some costs for rural sanitation; Forms of sanitation used by would be higher if subsidised households (facility and practices). sanplats are included Sanitary facilities in schools and markets Quality of water sources. 4.6 Primary and secondary Primary: Net enrolment to approach Estimates for MTEF based on unit Net and gross primary enrolment Wages in this sector are important education 100% by 2003 costs give shs. 212 billion in 99/00 Pupil-textbook and teacher ratios determinant of costs of whole PTR 50 by 2000, 41 by 2009 rising to 333 in 02/03 Public perceptions of quality PEAP TCR stabilises at 1.6 in 2003/4. Estimates of quality from NAPE. These costings are resource- constrained. Secondary: transition from primary Net and gross enrolment to sec/voc 65% by 2003, PTR rises Indicators of quality to 30 in 2003 Incidence of benefits, including access of poorest 20%. 4.7 Adult literacy 85% literacy after 5-year Shs. 116 billion over 5 years. Literacy rates, by sex programme____________ ____ 4.8 Environment Service delivery mainly in sectoral strategies, subject to discussion. 4.8 Housing Proportion thatched. 4.10 Disastermanagement Costing 35  36  Annex Table 2.1. Uganda: Selected Economic and Financial Indicators, 1996/97-1999/2000 1/ 1996/97 1997/98 1998/99 2000/01 2001/02 -2002/03 Prog. Proj. _ (Annual percentage changes, unless otherwise indicated) National income and prices GDP at constant prices 4.5 5.4 7.8 7.0 4.5 6.0 7.0 7.0 GDP deflator 3.5 11.9 3.0 5.0 4.2 6.7 5.4 5.3 GDP at factor cost (in billions of Uganda shillings) 6,023 7,104 7,887 8,861.3 8,589 9,712 10,954 12,345 Consumer prices End of period 10.4 -1.4 5.3 5.0 5.0 6.0 5.0 5.0 Nonfood 1.7 3.5 3.1 5.0 5.0 5.0 5.0 5.0 Annual average 7.8 5.8 -0.2 5.0 5.8 6.5 5.0 5.0 External sector (in U.S. dollars) Exports, f.o.b. 13.6 -31.7 19.8 6.2 -15.8 14.8 13.8 10.9 Imports, c.i.f. 2.3 13.2 -2.5 9.1 ~ 3.9 8.4 7.6 8.1 Terrns oftrade (deterioration-) -11.5 12.4 -6.3 -3.2 -14.8 1.2 5.1 4.7 Average exchange rate (Uganda shillings per U.S. dollar) 1,058 1,150 1,362 ... 1,501 1,576 1,626 1,678 Nominal effective exchange rate (average; depreciation-) -0.7 0.0 -14.0 ... ... ... ... ... Real effective exchange rate (average; deprciation 2.2 2.2 -13.0 ...... ... ... ... Government budget Total revenue and grants 16.9 17.1 13.2 25.4 18.2 12.2 10.0 10.5 Revenue 16.6 9.6 18.6 16.6 3.3 14.8 13.6 13.5 Expenditure and net lending 15.7 8.2 18.0 24.8 23.3 15.0 7.7 10.4 (Annual changes in percent of beginning-of-period stock of money and quasi money, 37  Annex Table 2.1. Uganda: Selected Economic and Financial Indicators, 1996/97-1999/2000 1/ 1996/97 1997/98 1998/99 2000/0 1 2001/02 2002/03 _________ _Prog. Proj. unless otherwise indicated) Money and credit Net foreign assets 29.4 32.4 14.0 13.0 16.9 13.1 13.9 17.8 Net domestic assets -11.I -6.3 -0.2 2.0 -0.9 1.9 1.1 -2.8 Domestic credit __ 4.7 2.2 17.7 2.0 0.4 5.5 0.8 1.2 Central government 2 _-8.3 0.1 -5.0 -0.3 -1.0 -5.7 -5.3 Credit to the private sector 2.3 10.5 12.8 7.0 2.8 6.6 6.6 6.6 Money and quasi money (M3) _18.3 26.1 13.8 15.0 16.0 15.0 15.0 15.0 M2 15.8 23.7 8.0 17.0 11.5 15.0 15.0 15.0 Velocity (GDP/M2) 2/ 9.2 9.0 8.7 8.6 8.6 8.6 8.4 8.3 Interest rate (in percent) 3/ 11.0 9.4 6.4 ... ... ... ... ... (In percent of GDP at factor cost) National income accounts Gross domestic investment 18.9 17.1 21.0 17.7 18.3 20.1 19.9 Public 6.4 5.8 6.0 7.3 7.4 7.8 7.3 7.0 Private 12.6 11.41 13.0 13.7 10.3 10.5 12.8 12.9 Grossnationalsavings(including 18.0 14.9 14.8 17.9 13.2 13.7 16.2 16.3 grants) Public 4.3 5.2 4.7 5.9 5.1 5.0 5.0 4.7 Private 13.6 9.7 10.2 12.0 8.1 8.7 11.2 11.5 External sector Current account balance (including official grants) -0.9 -2.2 -4.1 -3.1 -4.5 -4.6 -3.8 -3.6 (excluding official grants) -6.3 -8.4 -8.9 -9.5 -10.6 -10.6 -9.4 -8.8 External debt (including Fund) 64.9 63.0 64.1 61.7 62.6 62.5 58.7 58.5 Government budget _ _ __________ 38  Annex Table 2.1. Uganda: Selected Economic and Financial Indicators, 1996/97-1999/2000 1/ 1996/97 1997/98 1998/99 _ 2000/01 2001/02 2002/03 _________ Prog. Proj. Revenue 12.1 11.3 12.1 12.5 11.4 11.6 11.7 11.8 Grants 4.9 5.6 5.2 6.7 7.3 6.9 6.4 6.0 Total expenditure and net lending 19.0 17.5 18.6 20.6 21.0 21.4 20.4 20.0 Government balance (excluding grants) -6.9 -6.2 -6.5 -8.1 9- 6 -9.7 -8.7 -8.2 Government balance (including grants) -2.0 -0.6 -1.3 -1.4 -2.3 _ -2.8 -2.3 -2.2 Net foreign financing 3.4 2.7 3.0 3.5 3.9 3.5 3.7 3.3 Domestic bank financing _-0.9 -0.9 0.0 -0.6 0.0 -0. 1 -0.8 -0.8 Domestic nonbank financing -0.5 -1.1 -2.1 -1.5 -1.5 -0.5 -0.6 -0.3 (In percent of exports of goods and nonfactor services) Debt-service ratio 4/ Including Fund obligations 17.9 26.4 18.4 13.5 15.3 8.2 7.8 8.0 Excluding Fund obligations 10.6 16.4 9.9 6.6 7.1 1.5 2.5 3.0 (In millions of U.S. dollars, unless otherwise indicated) Overall balance of payments 107.3 109.2 -21.5 47.2 11.7 -50.5 8.6 External payments arrears (end of period) _ 314.2 275.6 241.5 0.0 0.0 0.0 0.0 0.0 Foreign exchange reserves ___ 621.9 750.5 748.1 831.8 823.9 858.4 924.1 996.2 Gross foreign exchange reserves (in months of imports of goods and nonfactor 4.5 4.8 4.9 5.0 5.2 5.0 5.0 5.0 services) Sources: Ugandan authorities; and Fund staff estimates and projections. 39  Annex Table 2.1. Uganda: Selected Economic and Financial Indicators, 1996/97-1999/2000 1/ __ __ _ __ 1996/97 1997/98 1998/99 _ 2000/01 2001/02 2002/03 ______________________ _ __________ ___________ Prog. Proj. _ 1/ Fiscal year begins in July. ________ 2/ Nominal GDP divided by average of current-year and previous-year end-period money stocks. 3/ Weighted annual average rate on 91- day treasury bills. 4/ The debt-service ratio incorporates estimates of the effects of the April 1998 Paris Club stock-of-debt operation and assumes rescheduling with non-Paris Club bilateral and commercial creditors on comparable terms. 40  Annex Table 2.2. Uganda: Fiscal Operations of the Central Government, 1996/97-2002/2003 1/ 1996/97 1997/98 1998/99 2000/2001 2001/02 2002/03 Prog. Proj. Projections (In billions of Uganda shillings) Total revenue and grants 1,024.3 1,199.1 1,357.8 1,702.0 1,605.3 1,800.9 1,981.8 2,190.5 Revenue 731.4 801.5 950.7 1,108.5 981.8 1,126.9 1,280.6 1,452.9 Tax 688.1 754.4 888.0 1,031.6 910.8 1,046.6 1,190.0 1,350.9 Nontax 43.3 47.1 62.7 76.8 71.0 80.3 90.6 102.0 Grants 292.9 397.7 407.0 593.5 623.5 674.0 701.2 737.6 Import support 125.7 193.4 161.8 291.7 300.8 325.0 329.9 349.1 Project grants 167.2 204.3 245.2 301.8 311.4 349.0 371.3 388.5 Expenditures and net lending 1,146.3 1,239.9 1,463.1 1,826.2 1,803.4 2,073.7 2,233.8 2,466.3 Current expenditures 667.6 728.0 870.2 1,004.4 1,004.6 1,108.0 1,235.5 1,383.3 Wages and salaries 227.0 255.8 341.2 410.2 404.0 450.8 500.6 565.2 Of which: defense 30.7 30.1 68.1 100.7 100.3 105.7 116.2 131.9 primary education 70.0 87.4 96.1 114.3 114.3 144.3 158.7 174.6 Interest payments 62.9 74.8 75.3 85.3 99.9 105.3 109.4 125.8 Domestic 22.0 29.1 21.4 31.4 34.2 44.9 44.0 49.0 External 40.9 45.7 53.9 53.9 65.7 60.4 65.4 76.8 Transfers to the Uganda Revenue Authority 26.4 25.4 29.7 35.0 32.4 34.0 35.7 39.2 Defense 92.0 75.1 112.5 69.7 69.7 81.2 91.3 100.4 Priority Program Areas 96.4 110.4 154.4 176.7 177.0 206.4 248.6 306.0 Statutory 22.4 61.5 35.3 70.7 77.9 70.6 82.5 64.8 Other 140.5 125.1 121.9 156.8 143.7 159.7 167.6 181.9 Development expenditures 476.7 508.9 590.6 780.1 786.7 920.0 982.3 1,060.0 External 371.5 419.2 445.9 510.8 546.2 590.6 628.3 657.5 Domestic 105.1 89.7 144.7 269.3 240.5 329.4 353.9 402.5 41  Annex Table 2.2. Uganda: Fiscal Operations of the Central Government, 1996/97-2002/2003 1/ 1996/97 1997/98 1998/99 2000/2001 2001/02 2002/03 Prog. Proj. Projections Of which: defense 8.2 8.4 7.4 6.6 6.6 6.6 6.9 7.8 primary education 0.0 4.8 31.3 63.0 63.1 72.1 98.5 94.1 Net lendingand investment 2/ 2.0 3.0 2.3 15.2 12.1 12.1 12.1 12.1 Contingency 0.0 0.0 0.0 26.4 0.0 33.6 3.9 10.9 Overall balance Including grants -122.0 -40.8 -105.3 -124.2 -198.1 -272.8 -252.0 -275.7 Excluding grants -414.9 -438.4 -512.4 -717.7 -821.6 -946.8 -953.2 -1,013.3 Domestic balance 3/ -2.5 26.4 -12.6 -152.9 -209.7 -295.8 -259.5 -279.1 Financing 122.0 48.8 . 67.8 124.2 198.1 272.8 252.0 275.7 Extemal financing (net) 207.4 194.8 236.0 312.6 331.9 339.0 401.8 407.7 Disbursement 253.0 254.8 335.8 413.1 428.7 430.5 505.3 521.5 Import support 48.6 50.5 90.6 204.1 205.2 188.9 248.3 252.5 Project loans 204.3 204.3 245.2 209.0 209.0 241.6 257.1 269.0 Amortization(-) -68.7 -77.9 -101.0 -111.5 -120.1 -124.8 -132.8 -149.8 Payment of extemal arrears -7.1 -16.3 -14.3 -17.7 -18.4 0.0 0.0 0.0 Payment of nondebt arrears 0.0 0.0 -15.4 0.0 0.0 0.0 0.0 0.0 Exceptional financing 30.2 34.2 30.9 28.7 41.8 33.4 29.3 36.1 Domestic financing (net) -85.4 -146.1 -168.3 -188.4 -133.9 -66.3 -149.8 -132.0 Bank financing 2/ -55.6 -67.1 0.6 -57.6 -3.1 -13.8 -88.8 -94.5 Bank of Uganda -147.3 -103.4 24.1 ... ... ... ... ... Commercial banks 91.6 36.2 -23.5 ... ... ... ... ... Of which: project accounts ... ... -44.5 ... ... ... ... Nonbank financing -29.7 -78.9 -168.9 -130.8 -130.8 -52.5 -61.0 -37.5 42  Annex Table 2.2. Uganda: Fiscal Operations of the Central Government, 1996/97-2002/2003 1/ 1996/97 1997/98 1998/99 2000/2001 2001/02 2002/03 Prog. Proj. Projections Check float 0.8 -18.4 -50.9 -5.0 -5.0 0.0 0.0 0.0 Payment of domestic arrears -28.1 -47.4 -116.0 -120.0 -120.0 -60.0 -71.0 -50.0 Promissory notes (net) ... -25.7 -7.1 -10.8 -10.8 0.0 0.0 0.0 Other 4/ -2.4 12.6 5.1 5.0 5.0 7.5 10.0 12.5 Of which: treasury bills -2.4 ... 5.1 ... ... ... ... Errors and omissions/financing gap 0.0 -8.0 37.6 0.0 0.0 0.0 0.0 0.0 Total revenue and grants 17.0 16.9 17.2 19.2 18.7 18.5 18.1 17.7 Revenue 12.1 11.3 12.1 12.5 11.4 11.6 11.7 11.8 Grants 4.9 5.6 5.2 6.7 7.3 6.9 6.4 6.0 Expenditures and net lending 19.0 17.5 18.6 20.6 21.0 21.4 20.4 20.0 Current expenditure 11.1 10.2 11.0 11.3 11.7 11.4 11.3 11.2 Development expenditures 7.9 7.2 7.5 8.8 9.2 9.5 9.0 8.6 External 6.2 5.9 5.7 5.8 6.4 6.1 5.7 5.3 Domestic 1.7 1.3 1.8 3.0 2.8 3.4 3.2 3.3 Overall balance Including grants -2.0 -0.6 -1.3 -1.4 -2.3 -2.8 -2.3 -2.2 Excluding grants -6.9 -6.2 -6.5 -8.1 -9.6 -9.7 -8.7 -8.2 Domestic balance 3/ 0.0 0.4 -0.2 -1.7 -2.4 -3.0 -2.4 -2.3 Primary balance -1.0 0.5 -0.4 -0.4 -1.1 -1.7 -1.3 -1.2 Financing 2.0 0.7 0.9 1.4 2.3 2.8 2.3 2.2 External financing (net) 3.4 2.7 3.0 3.5 3.9 3.5 3.7 3.3 Domestic bank financing (net) -0.9 -0.9 0.0 -0.6 0.0 -0.1 -0.8 -0.8 Domestic nonbank financing (net) -0.5 -1.1 -2.1 -1.5 -1.5 -0.5 -0.6 -0.3 43  Annex Table 2.2. Uganda: Fiscal Operations of the Central Government, 1996/97-2002/2003 1/ 1996/97 1997/98 1998/99 2000/2001 2001/02 2002/03 Prog. Proj. Projections Bank recapitalization bonds (in billions of Uganda shillings) 72.0 ... ... ... ... ... ... Total defense expenditures 2.2 1.6 2.4 2.0 2.1 2.0 2.0 1.9 Wages and salaries 3.8 3.6 4.3 4.6 4.7 4.6 4.6 4.6 Priority Program Areas and primary education 1.6 development expenditure 0.0 1.6 2.4 2.7 2.8 2.9 3.2 3.2 Poverty Action Fund 2.9 3.9 4.6 4.5 4.7 Sources: Ugandan authorities; and Fund staff estimates and projections. 1/ Fiscal year begins in July. 2/ Excludes face value of recapitalization bonds issued to the Bank of Uganda and to the Uganda Commercial Bank. However, full provision is made for the interest costs and amortization associated with these bond issues. 3/ Revenues less expenditures, excluding external interest due and externally financed development expenditures. 4/ Includes errors and omissions through 1996/97. 44  Annex Table 2.3. Uganda: Balance of Payments, 1996/97 - 2002/03 1/ (In millions of U.S. dollars, unless otherwise indicated) 1996/97 1997/98 1998/99 2000/01 2001/02 2002/03 Prog. Proj. Current account -53.4 -136.6 -239.9 -188.7 -258.2 -284.0 -259.3 -266.9 Trade balance -575.4 -952.7 -827.3 -916.8 -967.9 -1,019.2 -1,063.3 -1,131.8 Exports, f.o.b. 670.9 458.4 549.1 583.2 462.1 530.7 603.7 669.6 Coffee 365.6 268.9 306.7 300.5 243.7 269.5 312.8 348.7 Noncoffee 305.2 189.5 242.4 282.7 218.4 261.1 290.9 320.9 Imports, c.i.f 1,246.3 1,411.1 1,376.4 1,500.0 1,430.0 1,549.9 1,667.0 1,801.5 Project-related 209.5 217.9 203.0 195.4 202.1 208.2 214.7 217.6 Other imports 1,036.8 1,193.2 1,173.4 1,304.6 1,227.9 1,341.6 1,452.3 1,583.8 Non-factor services (net) -251.0 -284.4 -280.0 -288.0 -276.8 -293.5 -309.7 -323.8 Factor services (net) -16.5 -8.6 -14.1 -15.1 -15.1 -3.2 -2.6 5.3 Net interest -6.0 -2.3 4.7 8.7 5.6 16.0 18.1 27.6 Of which: interest due -44.5 -44.8 -44.8 -41.3 -48.2 -42.6 -44.0 -49.2 Net dividends and distributed earnings -10.4 -6.3 -18.8 -23.8 -20.8 -19.2 -20.7 -22.3 Transfers 789.5 1,109.0 881.5 1,031.3 1,001.6 1,031.8 1,116.3 1,183.3 Private transfers 482.1 729.2 605.0 641.4 654.0 663.3 739.7 800.0 Of which: identified FDI 2/ 160.0 190.0 230.0 241.2 212.5 229.4 246.8 269.3 NGOs 85.9 90.2 94.7 91.2 99.3 102.3 105.5 107.0 Official transfers 307.4 379.8 276.5 389.9 347.6 368.6 376.6 383.3 Project support 188.6 217.9 203.0 230.9 202.1 249.9 257.6 261.2 Import support 118.8 162.0 73.5 158.9 145.5 118.7 118.9 122.1 45  Annex Table 2.3. Uganda: Balance of Payments, 1996/97 - 2002/03 1/ (In millions of U.S. dollars, unless otherwise indicated) 1996/97 1997/98 1998/99 2000/01 2001/02 2002/03 Prog. Proj. Capital account 160.8 245.8 218.4 235.9 269.9 233.5 265.2 275.6 Official (net) 209.5 194.8 191.3 223.1 256.0 207.2 242.8 235.3 Disbursements 276.4 262.8 266.8 300.3 337.5 286.4 324.5 324.6 Project support 230.5 217.9 203.0 159.8 202.1 166.6 171.8 174.1 Import support 45.9 45.0 63.8 140.5 135.4 119.9 152.7 150.4 Amortization due 66.9 68.0 75.5 77.2 81.5 79.2 81.7 89.3 Private capital (net) 3/ -48.7 50.9 27.1 12.8 13.9 26.3 22.5 40.3 Overall balance 107.3 109.2 -21.5 47.2 11.7 -50.5 5.9 8.6 Financing -107.3 -109.2 21.5 -47.2 -11.7 50.5 -5.9 -8.6 Central bank reserves (-= increase) -129.2 -133.3 -39.8 -102.5 -79.1 -57.5 -108.0 -116.0 Gross reserve change -142.2 -128.6 2.4 -99.2 -75.8 -34.5 -65.7 -72.1 IMF (net) 10.0 -5.0 -35.7 -3.3 -3.3 -23.0 -42.2 -43.9 Short-term 3.0 0.3 -6.6 0.0 0.0 0.0 0.0 0.0 Change in arrears (net) 1.8 -43.1 -43.1 -241.5 -241.4 0.0 0.0 0.0 Exceptional financing 4/ 20.0 67.2 104.4 296.8 308.8 108.0 102.1 107.4 Toward arrears reduction 0.0 62.0 59.4 232.9 228.5 0.0 0.0 0.0 Current maturities 20.0 5.2 0.0 22.0 27.0 20.4 18.1 21.5 HIPC assistance 0.0 0.0 45.0 41.9 53.4 87.6 84.0 85.9 HIPC 1 41.9 41.5 41.6 38.0 35.9 IMF 0.0 0.0 15.4 12.9 12.9 9.9 7.3 5.5 IDA 0.0 0.0 13.9 15.9 16.7 19.7 19.8 19.7 Other 0.0 0.0 15.8 13.2 11.9 12.0 10.9 10.7 Enhanced HIPC 0.0 11.9 46.0 46.0 50.0 46  Annex Table 2.3. Uganda: Balance of Payments, 1996/97 - 2002/03 1/ (In millions of U.S. dollars, unless otherwise indicated) 1996/97 1997/98 1998/99 2000/01 2001/02 2002/03 Prog. Proj. Financing gap 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Memorandum items: Gross international reserves 5/ 4.5 4.8 4.9 5.0 5.2 5.0 5.0 5.0 Net international reserves 5/ 1.6 2.3 2.5 2.9 2.9 3.0 3.4 3.7 Current account-to-GDP ratio (in percent) Including official transfers -0.9 -2.2 -4.1 -3.1 -4.5 -4.6 -3.8 -3.6 Excluding official transfers -6.3 -8.4 -8.9 -9.5 -10.6 -10.6 -9.4 -8.8 Excluding official transfers and FDI -9.1 -11.4 -12.9 -13.4 -14.3 -14.3 -13.1 -12.5 Debt-service ratio Before rescheduling (including IMF) 20.3 27.2 24.6 21.7 27.7 22.7 19.9 19.5 After rescheduling (including IMF) 4/ 17.9 26.4 18.4 13.5 15.3 8.2 7.8 8.0 Coffee price (U.S. cents per kg.) 138.2 156.6 136.3 130.1 109.8 109.6 118.5 129.2 Coffee export volume (in millions of 60 kg. 4.4 2.9 3.8 3.9 3.7 4.1 4.4 4.5 bags) Exports of goods and nonfactor services 824.8 633.7 726.4 779.9 650.0 745.4 842.8 933.4 Sources: Ugandan authorities; and Fund staff estimates and projections. 1/ Fiscal year begins in July. 2/ The authorities have made preliminary estimates of the foreign direct investment component of private transfers for 1995/96. These estimates are being refined based on the recommendations of the recent STA technical assistance mission, and, although preliminary, the available information provides a better basis for projecting the evolution of private transfers. 3/ Includes private capital flows, foreign direct investment, and errors and omissions., but excludes identified capital transfers included in private transfers. 4/ For 1998/99 and beyond, incorporates effects of HIPC Initiative, including the April 1998 Paris Club stock-of-debt operation, as well as rescheduling with non-Paris Club bilateral and commercial creditors on terms viewed as comparable. 47  Annex Table 2.4. Uganda: Monetary Survey, 2000-3 (In billions of Uganda shillings; end of period) 2000 2001 2002 2003 June Proj. Monetary survey Net foreign assets 978.1 1,155.0 1,370.9 1,687.9 Net domestic assets 368.2 393.3 409.6 359.6 Domestic credit 492.8 567.4 580.1 602.3 Claims on central government (net) -131.0 -144.7 -233.5 -328.1 Claims on public enterprises 23.3 23.3 23.3 23.3 Claims on local governments 1.1 1.1 1.1 1.1 Claims on private sector 599.4 687.7 789.2 906.0 Valuation 175.4 125.9 129.5 57.3 Other items (net) -300.0 -300.0 -300.0 -300.0 Money and quasi money 1,346.3 1,548.2 1,780.5 2,047.5 M2 1,051.5 1,209.2 1,390.6 1,599.1 Currency in circulation 329.8 371.6 418.4 470.9 Demand deposits 414.7 476.9 548.4 630.6 Time and savings deposits 294.8 345.3 405.9 477.1 Certificates of deposit 12.1 15.5 17.8 20.5 Foreign currency deposits 294.8 339.1 389.9 448.4 Monetary authorities Net foreign assets 719.3 858.3 1,031.5 1,298.6 48  Annex Table 2.4. Uganda: Monetary Survey, 2000-3 (In billions of Uganda shillings; end of period) 2000 2001 2002 2003 June Proj. Foreign assets 1,268.4 1,408.9 1,514.6 1,738.4 Of which: foreign reserves 1,256.4 1,396.1 1,501.8 1,724.8 Foreign liabilities 549.1 550.6 483.1 439.9 Of which: liabilitites to IMF 545.9 547.2 479.8 436.3 Net domestic assets -240.7 -324.9 -425.4 -609.9 Domestic credit -217.0 -253.5 -357.6 -471.1 Claims on central government (net) -340.8 -415.0 -519.1 -632.6 Claims on private sector 10.7 10.7 10.7 10.7 Claimsoncommercialbanks(net) 113.1 150.8 150.8 150.8 Valuation 189.3 141.6 145.2 74.2 Other items (net) -216.5 -216.5 -216.5 -216.5 Base money 478.6 533.3 606.1 688.6 Currency outside banks plus cash in vaults 365.5 412.9 466.4 526.7 Commercial bank deposits with Bank of 113.1 120.4 139.7 162.0 Uganda Commercial banks Net foreign assets 258.8 296.7 339.4 389.3 Net domestic assets 757.6 879.9 1,022.6 1,187.3 Domestic credit 920.9 979.2 1,121.8 1,287.7 Claims on central government (net) 209.8 270.3 285.5 304.6 Claims on public enterprises 19.8 19.8 19.8 19.8 49  Annex Table 2.4. Uganda: Monetary Survey, 2000-3 (In billions of Uganda shillings; end of period) 2000 2001 2002 2003 June Proj. Claims on local governments 1.1 1.1 1.1 1.1 Claims on private sector 588.7 677.0 778.5 895.3 Of which: foreign exchange loans 65.9 Claims on Bank of Uganda (net) 35.7 11.0 36.9 66.9 ClaimsonBankofUganda 148.8 161.8 187.7 217.7 Total reserves 130.9 141.1 163.7 189.8 Required reserves 60.9 70.5 81.8 94.9 Excess reserves 70.0 70.5 81.8 94.9 Nonreserve vault cash 17.8 20.7 24.0 27.9 Holdings of BOU bills 0.0 0.0 0.0 0.0 Holdings of BOU PNs 37.7 0.0 0.0 0.0 Borrowing at Bank of Uganda 65.8 65.8 65.8 65.8 BOU claims on assets of closed banks 85.0 85.0 85.0 85.0 Valuation -13.9 -15.7 -15.7 -16.9 Other items (net) -83.5 -83.5 -83.5 -83.5 Deposit liabilities to nonbank residents 1,016.5 1,176.7 1,362.1 1,576.6 Shilling deposits 721.6 837.6 972.1 1,128.2 Demand deposits 414.7 476.9 548.4 630.6 Time and savings deposits 294.8 345.3 405.9 477.1 Certificates of deposit 12.1 15.5 17.8 20.5 Foreign currency deposits 294.8 339.1 389.9 448.4 Memorandum items: Net domestic assets (net of valuation acccount) 192.8 267.4 280.1 302.3 Base money (12-month change in percent) 7.4 11.4 13.6 13.6 50  Annex Table 2.4. Uganda: Monetary Survey, 2000-3 (In billions of Uganda shillings; end of period) 2000 2001 2002 2003 June Proj. M3 (12-month change in percent) 16.0 15.0 15.0 15.0 M2 (12-month change in percent) 11.5 15.0 15.0 15.0 Currency outside banks-to-M3 (percent) 24.5 24.0 23.5 23.0 Foreign currency deposits-to-M2 (percent) 21.9 21.9 21.9 21.9 Credit to the private sector (12-month change in percent) 14.7 14.8 14.8 Base money multiplier (M2/base money) 2.2 2.3 2.3 2.3 Required reserves-to-deposit ratios Demand deposits 0.1 0.1 0.1 0.1 Time deposits 0.1 0.1 0.1 0.1 Excess reserves-to-required-reserves ratio 115.0 100.0 100.0 100.0 Proportion of vault cash allowable as reserves 0.5 0.5 0.5 0.5 Source for Annex Tables 2.1, 2.2, 2.3 and 2.4:estimates agreed by MFDEP, BOU and IMF staff. 51  Z's  Annex Table 3: Summary of Medium-Term Expenditure Framework 1999120M0 Approved Budge Estimates 2000/01 Budget Projections Wage Non- Donor Total Total ind. Wage Non- Domestic Donor Total Total Wage Domestic project excl. donors Wage Dev project excl. incl.dono recurrent Dev donors recurrent donos rs ISO/ESO 7.22 6.34 0.50 14.06 14.06 7.58 6.34 0.50 14.42 14.42 Defence excl LDUs 100.63 69.77 6.60 - 177.00 177.00 105.66 81.24 6.60 193.50 193.50 Defence Pensions .. .. (Statutory) 2.80 - 2.80 2.80 2.80 2.80 2.80 SUB-TOTAL SECURfTY 78.90 7.10 - 193.86 193.86 113.25 90.37 7.10 - 210.72 210.72 Works, Housing and Communications 1.70 16.32 75.58 127.25 93.60 220.85 1.78 17.82 98.11 136.64 117.71 254.35 District Road Maintenance - 11.55 - - 11.55 11.55 - 18.00 - - 18.00 18.00 SUB-TOTAL ROADS 27.87 75.58 127.25 105.15 232.39 1.78 35.82 98.11 136.64 135.71 272.35 Agriculture, Animal Industry and Fisheries 1.19 2.12 4.53 43.12 7.84 50.96 1.25 1.96 4.14 46.92 7.34 54.26 National Research Organisation(NARO) - 2.76 3.51 11.38 6.27 17.66 - 2.62 3.73 12.38 6.36 18.74 District Agricultural Extension 3.15 1.10 - - 4.25 4.25 3.31 1.10 - - 4.41 4.41 SUB-TOTAL AGRICULTURE 5.g9 8.04 54.50 18.37 72.87 4.55 5.68 7.87 59.30 18.11 77.41 Uganda Management Institute 0.45 - - 0.45 0.45 - 0.40 - - 0.40 0.40 53  Annex Table 3: Summary of Medium-Tern Expenditure Framework 1999/2000 Approved Budget Estimates 2000/01 Budget Projections Wage Non- Donor Total Total ind. Wage Non- Domestic Donor Total Total Wage Domestic project excl. donors Wage Dev project excd. incl.dono recurrent Dev donors recurrent donos rs Education and Sports (nci Prim Educ) 5.64 33.86 41.73 30.54 81.23 111.77 5.92 31.97 40.75 33.23 78.64 111.87 Makerere University - 23.10 0.28 0.54 23.38 23.92 - 22.06 0.14 0.59 22.20 22.78 Mbarara University 2.19 1.87 1.09 - 5.15 5.15 2.30 1.65 0.41 - 4.36 4.36 Institute of Teacher Education (1TEK) 1.94 0.75 0.12 0.16 2.81 2.97 2.04 0.66 0.05 0.17 2.75 2.92 Education Service Commission 0.19 0.54 0.10 - 0.84 0.84 0.20 0.48 0.04 - 0.72 0.72 District Prilary Educ incl School Facilities 114.31 38.41 28.88 - 181.60 181.60 144.31 38.41 57.94 - 240.66 240.66 Grant District Secondary Education 33.69 4.76 - - 38.46 38.46 35.38 4.53 - - 39.91 39.91 District Tertiary Institltions 7.55 - - - 7.55 7.55 7.92 - - - 7.92 7.92 SUB-TOTAL EDUCATION 103.75 72.20 31.24 341.47 372.71 198.08 100.14 "9.33 33.99 397.55 431.55 Health 2.51 8.63 12.02 99.62 23.17 122.79 2.64 8.03 10.54 108.39 21.21 129.60 Butabika Hospital 0.53 0.99 0.15 - 1.67 1.67 0.56 0.94 0.06 - 1.55 1.55 Mulago Hospital Complex 5.23 6.00 1.95 15.05 13.19 28.24 5.50 5.46 0.92 16.38 11.88 28.25 Health Service Commission 0.13 0.53 0.10 - 0.75 0.75 0.13 0.47 0.04 - 0.63 0.63 District NGO Hospitals/Primary Health - 3.30 - - 3.30 3.30 - 3.30 - - 3.30 3.30 Care District Primary Health Care 7.36 5.00 - - 12.36 12.36 7.73 27.03 - - 34.76 34.76 54  Annex Table 3: Summary of Medium-Term Expenditure Framework 199/2000 Approved Budget Estmates 2000/01 Budget Projections Wage Non- Donor Total Total in. Wage Non- Domestic Donor Total Total Wage Domestic project excl. donors Wage Dev project excl. ind.dono recurrent Dev donors recurrent donos rs District Medical Services - 6.48 - - 6.48 6.48 - 6.16 - - 6.16 6.16 District Health Training Schools - 1.85 - - 1.85 1.85 - 1.76 - - 1.76 1.76 District Referral Hospitals (incl Other 6.99 3.99 - - 10.98 10.98 7.33 3.79 - - 11.13 11.13 Delegated) District Lunch Allowance 9.18 - - - 9.18 9.18 9.64 - - - 9.64 9.64 SUB-TOTAL HEALTH 36.77 14.22 114.67 82.92 197.59 33.52 56.93 11.55 124.76 102.00 226.77 Uganda Police (incl LDUs) 22.53 22.33 5.38 1.50 50.24 51.74 23.66 20.66 4.04 1.63 48.36 49.99 Uganda Prisons 3.74 7.97 0.88 - 12.59 12.59 3.93 7.37 0.33 - 11.63 11.63 Internal Affairs 0.71 1.50 0.26 - 2.47 2.47 0.74 1.32 1.10 - 3.16 3.16 DPP 0.69 0.33 0.15 0.51 1.17 1.68 0.73 0.35 0.06 0.55 1.13 1.69 Justice Court Awards (Statutory) - 0.98 - - 0.98 0.98 - 2.00 - - 2.00 2.00 Justice, Attorney General excl 1.14 1.27 1.78 - 4.19 4.19 1.20 1.13 0.68 - 3.01 3.01 Compensation Justice, Attorney General - Compensation - 1.13 - - 1.13 1.13 - 2.00 - - 2.00 2.00 Judiciary (Statutory) 5.27 5.96 2.06 - 13.29 13.29 5.53 5.96 0.78 - 12.28 12.28 Judicial Service Commission 0.18 0.23 0.10 - 0.51 0.51 0.19 0.22 0.04 - 0.45 0.45 Law Reform Commission 0.11 0.35 0.20 - 0.66 0.66 0.11 0.34 0.08 - 0.52 0.52 55  Annex Table 3: Summary of Medium-Term Expenditure Framework 1999/2000 Approved Budget Estimates 2000/01 Budget Projections Wage Non- Donor Total Total incl. Wage Non- Domestic Donor Total Total Wage Domestic project excl. donors Wage Dev project excl. incl.dono recurrent Dev donors recurrent donos rs SUB-TOTAL LAW AND ORDER 42.05 10.81 2.01 87.23 89.24 36.09 41.35 7.11 2.19 84.55 86.73 Energy and Minerals [Natural Resources] 0.66 0.40 0.15 4.38 1.21 5.59 0.69 0.35 0.16 4.77 1.20 5.97 Tourism, Trade and Industry 0.32 1.63 4.00 19.68 5.95 25.63 0.33 1.43 2.86 21.41 4.62 26.04 Water, Lands and Envir. excl Compensation 1.69 2.21 17.30 72.87 21.20 94.06 1.77 1.98 17.30 79.28 21.04 100.32 Gender, Labour and Social Development 0.79 3.38 2.50 6.42 6.67 13.10 0.83 2.98 1.16 6.99 4.97 11.96 Office of the Prnme Minister (Development) 20.56 7.24 20.56 27.80 11.55 7.88 11.55 19.43 Finance, Planning & Econ Dev (Development) 33.95 49.45 33.95 83.39 26.70 53.80 26.70 80.50 Local Government Dev (excl Roads) . 0.83 23.25 0.83 24.08 0.57 25.30 0.57 25.86 District Water Conditional Grant 4.10 - - 4.10 4.10 - 1.19 23.00 - 24.19 24.19 District Equalisation Grant District Development Grant - 1.68 1.68 16.00 - 16.00 16.00 SUB-TOTAL ECONOMIC FUNCTIONS AND SS 13.71 80.97 183.29 98.14 281.43 3.63 11.93 99.29 253.22 114.85 368.07 Office of the Prime Minister (excl Dev) 0.48 1.44 - 1.93 1.93 0.51 1.74 2.25 2.25 Foreign Affairs 0.78 12.26 0.20 - 13.24 13.24 0.82 10.79 0.08 - 11.68 11.68 MFPED (excl URA, Contingency & Dev) 1.38 4.62 6.00 6.00 1.45 4.18 5.63 5.63 URA 56  Annex Table 3: Summary of Medium-Term Expenditure Framework 199912000 Approved Budget Esthnates 2000/01 Budget Projections Wage Non- Donor Total Totd incl. Wage Non- Domestic Donor Total Total Wage Domestic project excl. donors Wage Dev project excl. incl.dono recurrent Dev donors recurrent donos rs 35.00 1.50 - 36.50 36.50 33.95 0.57 - 34.52 34.52 Inspector General of Government (IGG) 0.59 2.54 0.10 0.19 3.23 3.42 0.67 2.84 0.11 0.21 3-62 3.83 Audit 0.79 1.96 0.11 1.36 2.86 4.22 0.91 2.17 0.12 1.48 3.20 4.68 State House 0.87 21.38 4.11 26.36 26.36 0.91 18.82 1.56 21.29 21.29 Public Service 0.81 2.70 0.76 4.45 4.27 8.72 0.85 2.37 0.48 4.84 3.70 8.55 Public Service Commission 0.37 0.77 0.10 - 1.23 1.23 0.39 0.72 0.04 - 1.15 1.15 Parliameent (exci MPs' Vehicles) Local Government (excl Dev) 0.39 1.54 - 1.92 1.92 0.40 1.42 1.83 1.83 Mass Mobilisation 2.01 3.64 1.30 - 6.95 6.95 2.11 3.20 0.49 - 5.81 5.81 Office of the President (excl ISO/ESO, Rent) 3.16 4.27 4.10 11.53 11.53 3.31 3.76 1.40 8.48 8.48 Office of the President - . .. .. Rent 1.98 1.98 1.98 1.75 1.75 1.75 Specified Officers - Salaries (Statutory) 0.29 0.29 0.29 0.29 0.29 Public Service Pension/Comp 25.90 - 25.90 25.90 25.90 25.90 25.90 (Statutory) Parlimntary Commission (Statutory) 14.47 2.37 - 21.47 21.47 4.86 12.73 0.90 18.49 18.49 Local Govt Finance Comm (Statutory) 0.23 0.19 0.42 0.42 0.24 0.17 0.41 0.41 Uganda Human Rights Comm (Statutory) 0.91 0.63 0.10 1.64 1.64 0.96 0.55 0.04 1.55 1.55 Electoral Commission (Statutory) 2.22 16.40 - - 18.61 18.61 2.33 20.50 - - 22.83 22.83 Unconditional Grant 57  Annex Table 3: Summary of Medium-Term Expenditure Framework 1999/2000 Approved Budget Estimates 2000/01 Budget Projections Wage Non- Donor Total Total incl. Wage Non- Domestic Donor Total Total Wage Domestic project excl. donors Wage Dev project excl. ind.dono recurrent Dev donors recurrent donos rs (Urban Authorities) - 3.96 3.96 3.96 - 4.16 - - 4.16 4.16 Unconditional Grant (District) 34.22 28.43 - - 62.65 62.65 35.93 29.85 - - 65.78 65.78 SUB-TOTAL PUBLIC ADMINISTRATION 184.08 14.75 6.00 252.93 258.93 56.93 181.58 5.79 6.53 244.30 250.83 Domestic Interest 30.78 - 30.78 30.78 41.70 41.70 41.70 External Interest 58.85 - 58.85 58.85 60.30 60.30 60.30 SUB-TOTAL - 89.63 - - 89.63 89.63 - 102.00 - - 102.00 102.00 Total Line Ministries (incl contingency) 318.51 248.57 518.97 744.47 1,263.43 185.08 337.97 242.85 573.09 765.90 1,338.99 Total District Programmes 114.93 30.56 - 361.94 361.94 251.56 143.27 96.94 - 491.76 491.76 LINE MIN + DISTRICT PROG 433.44 279.14 518.97 1,106.40 1,625.37 436.63 481.24 339.79 573.09 1,257.66 1,830.75 Statutory Interest - 89.63 - - 89.63 89.63 - 102.00 - - 102.00 102.00 Statutory excl Interest 67.32 4.53 - 85.39 85.39 14.20 70.61 1.72 - 86.54 86.54 GRAND TOTAL (inci Contingency) 590.39 283.67 518.97 1,281.43 1,800.39 450.84 653.85 341.51 573.09 1,446.19 2,019.29 58  Annex Table 3: Summary of Medium-Term Expenditure Framework 2001/02 Budget Projections 2002/03 Budget Projections Wage Non- Total Total incl. Wage Non- Donor Total Total Wage Domestic Donor excl. donors Wage Domestic project excl. incl. recurrent Dev projec donors recurrent Dev donors donors ISO/ESO 8.34 8.07 0.53 16.93 16.93 9.47 8.87 0.59 18.93 18.93 Defence excl LDUs 116.23 91.27 6.93 214.43 214.43 131.92 100.40 7.80 240.12 240.12 Defence .. .. .. Pensions 2.94 2.94 2.94 3.23 3.23 3.23 (Statutory) SUB- TOTAL 124.57 102.28 7.46 - 234.30 234.30 141.39 112.50 8.39 - 262.28 262.28 SECURITY Works, Housing and 1.96 19.51 103.02 150.07 124.49 274.56 2.23 22.08 115.89 162,08 140.20 302.28 Communicati ons District Road - 20.00 - - 20.00 20.00 - 32.69 - - 32.69 32.69 Maintenance SUB- TOTAL 1.96 39.51 103.02 150.07 144.49 294.56 2.23 54.77 115.89 162.08 172.89 334.97 ROADS Agriculture, Animal 1.37 2.11 4.35 50.86 7.83 58.69 1.56 2.37 4.89 54.93 8.82 63.74 Industry and Fisheries 59  Annex Table 3: Summary of Medium-Term Expenditure Framework 2001/02 Budget Projections 2002/03 Budget Projections Wage Non- Total Total ind. Wage Non- Donor Total Total Wage Domestic Donor excl. donors Wage Domestic project exd. Mcl. recurrent Dev projec donors recurrent Dev donors donors t National Research - 2.89 3.92 13.42 6.80 20.23 - 3.27 4.41 14.50 7.68 22.18 Organisation (NARO) District Agricultural 3.64 1.21 - - 4.85 4.85 4.00 1.38 - - 5.38 5.38 Extension SUB TOTAL 5.01 6.21 8.26 64.28 19.49 83.77 5.56 7.02 9.30 69.42 21.88 91.30 AGRICULT URE Uganda Management - 0.42 - - 0.42 0.42 - 0.46 - 0.46 0.46 lnstitute Educadon and Sports 6.51 35.04 42.79 36.02 84.34 120.37 7.39 39.68 48.14 38.91 95.21 134.12 (incl Prim Edc) Makerere University - 23.28 0.14 0.64 23.42 24.06 - 25.70 0.16 0.69 25.86 26.54 Mbarara University 2.53 1.73 0.43 - 4.70 4.70 2.88 1.90 0.49 - 5.27 5.27 InstitLte of Teacher 2.25 0.69 0.05 0.19 2.99 3.17 2.55 0.76 0.17 0.20 3.48 3.69 Education (rrEK) Education Service 0.22 0.50 0.04 - 0.76 0.76 0.25 0.55 0.04 - 0.85 0.85 Commission District Primary Educ 158.74 42.25 60.84 - 261.83 261.83 174.61 47.95 68.44 - 291.01 291.01 incl School Facilities 60  Annex Table 3: Summary of Medium-Term Expenditure Framework 2001/02 Budget Projections 2002103 Budget Projecttons Wage Non- Total Total icl. Wage Non- Donor Total Total Wage Domestic Donor exd. donors Wage Domaestc project exd. incl. recurrent Dev projec donors recurrent Dev donors donors Grant District Secondary 38.92 4.98 - - 43.90 43.90 42.81 5.65 48.46 48.46 Education District Terfiary 8.72 - - - 8.72 8.72 9.59 - - - 9.59 9.59 Institutions SUB- TOTAL 217.89 108.89 104.29 36.85 431.07 467.92 240.08 122.65 117.45 39.80 480.19 519.98 EDUCATIO N Health 2.90 8.73 11.06 117.49 22.69 140.19 3.29 9.83 12.45 126.89 25.57 152.46 Butabika Hospital 0.61 1.03 0.15 - 1.79 1.79 0.69 1.17 0.15 - 2.01 2.01 Mulago Hospital 6.05 5.86 0.97 17.75 12.87 30.62 6.86 6.54 1.09 19.17 14.48 33.66 Complex Health Service 0.14 0.49 0.04 - 0.67 0.67 0.16 0.54 0.04 - 0.75 0.75 Commission District NGO - 3.63 - - 3.63 3.63 - 4.12 - - 4.12 4.12 Hospitals/Pri mary Health Care District Primary 8.50 43.74 - - 52.25 52.25 9.35 61.95 - - 71.31 71.31 Healdt Care District Medical - 6.77 - - 6.77 6.77 - 7.69 - - 7.69 7.69 Services District 61  Annex Table 3: Summary of Medium-Term Expenditure Framework 2001/02 Budget Projections 2002/03 Budget Projections Wage Non- Total Total incl. Wage Non- Donor Total Total Wage Domestic Donor exd. donors Wae Domestic project excl. ind. recurrent Dev projec donors recurrent Dev donors donors t Health - 1.93 - - 1.93 1.93 - 2.19 - - 2.19 2.19 Training Schools District Referral 8.07 4.17 - - 12.24 12.24 8.88 4.73 - - 13.61 13.61 Hospitals (incl Other Delegated) District Lunch 10.60 - - - 10.60 10.60 11.66 - - - 11.66 11.66 Allowance TOTAL 36.88 76.35 12.22 135.24 12S.45 260.69 40.90 98.75 13.73 146.06 153.39 299.45 HEALTH Uganda Police (inrl 26.02 22.38 4.25 1.77 52.65 54.42 29.53 25.14 4.78 1.91 59.46 61.37 LDUs) Uganda Prisons 4.32 7.99 0.35 - 12.66 12.66 4.90 8.98 0.40 - 14.27 14.27 Internal Affairs 0.82 1.39 1.15 - 3.36 3.36 0.93 1.53 1.30 - 3.75 3.75 DPP 0.80 0.64 - 0.60 1.45 2.05 0.91 0.73 - 0.65 1.64 2.29 Justice Court Awards - 2.00 - - 2.00 2.00 - 2.20 - - 2.20 2.20 (Statutory) Justice, Attorney 1.32 1.20 0.71 - 3.23 3.23 1.49 1.33 0.80 - 3.62 3.62 General excl Compensatio n Justice, Attorney - 2.00 - - 2.00 2.00 - 2.20 - - 2.20 2.20 62  Annex Table 3: Summary of Medium-Term Expenditure Framework 2001/02 Budge Proje 2002103 Budget Projecions Wage Non- Total TOtal ml. Wage Non Donor Total Total Wage Domestic Donor exci. donors Wage Domestc project exel. bmd. recurrent Dev projec donors recurrent Dev donors donors t Genera - Compensatio n Judiciary (Statutory) 6.09 6.26 0.82 - 13.17 13.17 6.91 6.88 0.92 - 14.72 14.72 Judicial Service 0.21 0.24 0.04 - 0.49 0.49 0.24 0.28 0.04 - 0.56 0.56 Commission Law Reform Commission 0.12 0.37 0.08 - 0.57 0.57 0.14 0.42 0.09 - 0.65 0.65 TOTAL 39.69 44.47 7.40 2.37 91.56 93.93 45.05 49.68 8.33 2.56 103.06 105.62 LAW AND ORDER , Energy and Minerals 0.76 0.37 0.17 5.17 1.30 6.47 0.86 0.41 0.19 5.58 1.46 7.04 [Naral Resources Tourism, Trade and 0.37 1.50 3.00 23.21 4.87 28.08 0.42 1.66 3.37 25.07 5.45 30.51 Industry Water, Lands and 1.95 2.10 18.16 85.94 22.21 108.15 2.21 2.32 20.43 92.81 24.97 117.78 Envir. excl Compensatio n Gender, Labour and 0.92 3.12 1.22 7.58 5.26 12.84 1.04 3.44 1.37 8.18 5.85 14.03 Social Development Offie of dte Prime 12.13 8.54 12.13 20.66 13.64 9.22 13.64 22.86 Minister 63  Annex Table 3: Summary of Medium-Term Expenditure Framework 2001/02 Budget Projections 2002/03 Budget Projections Wage Non- Total Total ind. Wage Non- Donor Total Total Wage Domestic Donor excl. donors Wage Domestic project excl. incl. recurrent Dev projec donors recurrent Dev donors donors t (Developmen t) Finance, Planning & Econ Dev (Development) 28.04 58.32 28.04 86.36 31.54 62.98 31.54 94.53 Local Government 0.59 27.42 0.59 28.01 0.67 29.61 0.67 30.28 Dev (excl Roads) District Water - 1.31 24.15 - 25.46 25.46 - 1.49 27.17 - 28.65 28.65 Conditional Grant District Equalisation - 5.00 - - 5.00 5.00 - 8.00 - - 8.00 8.00 Grant District Development Grant 16.83 - 16.83 16.83 17.95 - 17.95 17.95 SUB TOTAL 3.99 13.40 132.33 274.49 149.72 424.21 4.53 17.31 170.13 287.26 191.97 479.23 ECONOMI C FUNCTION S AND SS Office of the Prime 0.56 1.83 2.39 2.39 0.63 2.01 2.65 2.65 Minister (excl Dev) Foreign Affairs 0.90 11.33 0.08 - 12.31 12.31 1.02 12.46 0.09 - 13.57 13.57 MFPED (excl URA, 1.59 9.24 10.83 10.83 1.81 10.22 12.03 12.03 Contingency & Dev) 64  Annex Table 3: Summary of Medium-Term Expenditure Framework 2001/02 Budget Projections 2002/03 Budget Projections Wage Non- Total Total inld. Wage Non- Donor Total Total Wage Domestic Donor excd. donors Wage Domestk project excl. incl. recurrent Dev projec donors recurrent Dev donors donors t URA 35.65 0.60 - 36.25 36.25 39.21 0.67 - 39.89 39.89 Inspector General of 0.74 3.12 0.12 0.23 3.97 4.20 0.84 3.54 0.13 0.25 4.51 4.76 Government (IGG) Audit 1.00 2.39 0.13 1.60 3.51 5.11 1.14 2.71 0.14 1.73 3.99 5.72 State House . 1.00 19.76 1.64 22.40 22.40 1.14 21.73 1.84 24.72 24.72 Public Service 0.94 2.49 3.50 5.25 6.93 12.18 1.07 2.74 3.94 5.67 7.75 13.41 Public Service 0.43 0.79 0.04 - 1.26 1.26 0.48 0.90 0.04 - 1.43 1.43 Commission Parliament .. .. .. (exci MPs' - Vehicles) Local Goverment 0.45 1.54 1.99 1.99 0.51 1.73 2.24 2.24 (excl Dev) Mass Mobilisation 2.32 3.36 0.52 - 6.20 6.20 2.63 3.70 0.58 - 6.92 6.92 Office of the President 3.65 5.10 1.47 10.22 10.22 4.14 5.61 1.66 11.41 11.41 (exci ISO/ESO, Rent) Office of the President- 1.83 1.83 1.83 2.02 2.02 2.02 Rent Specified Officers - 0.29 0.29 0.29 0.32 0.32 0.32 Salaries (Statutory) 65  Annex Table 3: Summary of Medium-Term Expenditure Framework 2001102 Budget Projections 2002/03 Budget Projections Wage Non- Total Total incl. Wage Non- Donor Total Total Wage Domestic Donor exci. donors Wage Domestic project excl. incl. recurrent Dev projec donors recurrent Dev donors donors t Public Service Pension/Comp 27.19 27.19 27.19 29.91 29.91 29.91 (Statutory) Parliamentary 5.34 13.37 0.95 - 19.66 19.66 6.06 14.71 1.06 - 21.84 21.84 Conimission (Statutory) Local Govt Finance 0.27 0.18 0.44 0.44 0.30 0.19 0.49 0.49 Conmm (Statutory) Uganda Human 1.05 0.58 0.04 - 1.67 1.67 1.20 0.64 0.04 - 1.88 1.88 Rights Comm (Statutory) Electoral Commission 2.56 30.00 - - 32.56 32.56 2.90 7.00 - - 9.90 9.90 (Statutory) Unconditiona - 4.37 - - 4.37 4.37 - 4.58 - - 4.58 4.58 I Grant (Urban Authorities) Unconditiona 39.52 31.34 - - 70.87 70.87 43.48 32.91 - - 76.39 76.39 I Grant (District) SUB TOTAL 62.60 205.46 9.08 7.08 277.14 284.22 69.65 198.54 10.21 7.65 278.40 286.04 PUBLIC ADMINIST RATION Domestic Interest 66  Annex Table 3: Summary of Medium-Term Expenditure Framework 2001/02 Budget Projections 2002/03 Budget Projections Wage Non- Total Total incl. Wage Non- Donor Total Total Wage Domestic Donor exd. donors Wage Domestic project excl. ind. recurrent Dev projec donors recurrent Dev donors donors t 50.70 50.70 50.70 52.80 52.80 52.80 External Interest 62.40 62.40 62.40 64.30 64.30 64.30 SUB- TOTAL - 113.10 - - 113.10 113.10 - 117.10 - - 117.10 117.10 Total Line Ministries 208.29 370.35 262.39 623.19 841.03 1,464.22 243.12 412.12 299.04 673.04 954.29 1,627.33 (ind contingency) Total District 276.71 170.71 101.82 - 549.24 549.24 304.38 215.34 113.56 - 633.27 633.27 Programmes LINE MIN + 485.00 541.06 364.21 623.19 1,390.26 2,013.45 547.51 627.46 412.60 673.04 1,587.57 2,260.61 DISTRICT PROG Statutory Interest - 113.10 - - 113.10 113.10 - 117.10 - - 117.10 117.10 Statutory excd Interest 15.60 82.52 1.81 - 99.92 99.92 17.69 64.77 2.03 - 84.49 84.49 GRAND TOTAL (incd 500.59 736.67 366.02 623.19 1,603.28 2,226.47 565.20 809.33 414.63 673.04 1,789.16 2,462.20 Contingency 67