29 January 2010
Uganda was the first country to be declared eligible and to benefit from the Heavily Indebted Poor Countries (HIPC) Initiative. In May 2000, Uganda reached completion point under the enhanced HIPC initiative and received $2 billion debt-service relief.
In Uganda a big infrastructure push was initiated in 2008/09. Compared to the 2007/08 spending the share allocated to roads and works has gone up from 7.6% to 13.4% in 2008/09 and 16.0% in the 2009/10 budget. The World Bank identified infrastructure as the major constraint to growth in its Economic memorandum in 2007 and the move to a higher allocation for this sector is thus seen as a positive step.
This infrastructure push wouldn’t have been possible without the fiscal space provided through debt relief and the resulting lower level of debt service.
The UK has been instrumental in developing and implementing international debt relief initiatives such as the enhanced HIPC Initiative and Multilateral Debt Relief Initiative (MDRI). These initiatives have so far delivered around US $117 billion worth of debt relief to poor countries. Annual spending on anti-poverty programmes has increased from approximately $6 billion in 2000 to $27 billion in 2008.
Uganda has partially achieved some of the MDGs with overall economic growth averaging 7% annually since 2000 and 1.4 million people were lifted out of poverty between 2003 and 2006. However, over 9 million people still live in poverty. Corruption, lack of adequate infrastructure, high population growth and poor service delivery has restricted the impact of the impressive growth rate on poverty reduction.
DFID has signed a 10 year £700 million partnership agreement to support the Ugandan government’s National Development Plan priorities. DFID’s bilateral aid allocation will rise over the next three years: £70 million in 2008/09; £75 million in 2009/10 and £85 million in 2010/11. Around half of our aid framework is currently provided as Poverty Reduction Budget Support (PRBS).
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