Uganda's Economic Reforms: Insider Accounts
Following the eight year rule of Idi Amin, then several years of war and civil war, the Ugandan economy was in ruins by the time peace was restored in 1986. Since then Uganda has consistently been one of the fastest growing economies in Africa, leading to a substantial reduction in poverty. Its economic success has attracted considerable attention and has arguably had more influence on development thinking and on the international aid architecture than any other country. The HIPC debt relief initiative, the Paris Declaration on Aid Effectiveness, and the growth of budget support have all been strongly influenced by Ugandan experience and thinking. Ugandan innovations such as poverty reduction strategies, public expenditure tracking surveys, and virtual poverty funds have been widely adopted elsewhere.
Most of the reforms which transformed the economy originated within the Uganda government during the 1990s, rather than being imposed through donor conditionality. In this book, for the first time many of the architects of those reforms give their personal accounts of the thinking behind the reforms, how they were implemented, and their impact. Since measures that work well in one environment may fail when transplanted to a different environment, the authors identify factors that were critical to the success of Uganda's reforms. While a number of individual reforms have been the subject of academic study, this book represents the first consolidated account of the economic reforms undertaken by the Uganda government and their impact on growth and poverty reduction.
and Monetary Policy 35 37 38 40 41 45 47 49 49 50 52 Charles Byaruhanga, Mark Henstridge, and Louis Kasekende 1 Introduction 2 The two big reforms of the early 1990s 52 53 Contents 3 Sustaining reform during the 1990s 4 The evolution of macroeconomic policy during the 2000s 5 Conclusions 4. Public Service Restructuring and Pay Reform 57 71 87 89 Mary Goretti Sendyona 1 2 3 4 Introduction Restructuring and reorganization Pay reform Conclusions 5. Tax Reform 89 89 96 101 103 Gerry
government had demonstrated that it could be trusted to spend donors’ money effectively and on the right things. Moreover, donors (and the public) were routinely consulted on allocations through SWGs and the annual Public Expenditure Review. In this context, much of the case for project aid had evaporated. While accounting for public expenditure remained a weak area, government undertook to strengthen public ﬁnancial management (see Chapter 15). This would be easier in a context where aid was
1970s and 1980s. The number of public servants was halved between 1990 and 1995 through a number of measures such as the elimination of ghost employees, retrenchment, voluntary retirement, abolition of group employees, and a recruitment freeze. The number of ministries was reduced and many non-core government functions were divested. The reduction in numbers, the monetization of beneﬁts, and increases in the wage bill as the economy revived, together contributed to signiﬁcant real salary
in terms of both economic and administrative efﬁciency.5 To widen the tax base and make the tax system more equitable for businesses and consumers, a VAT was introduced in Uganda in 1996. It replaced Sales Tax and the Commercial Transactions Levy (CTL). A standard rate of 17 per cent was chosen to keep the new tax revenue neutral in the short term i.e. to achieve much the same yield from VAT as was previously obtained from Sales Tax and CTL and avoid any increased tax burden which might
photocopiers); and Section 2 comprised projects jointly ﬁnanced by donors and government. This was the counterpart funding budget. Prior to 1992/93 wholly donor ﬁnanced projects were omitted altogether from the Budget and received little attention from MoF and MoPED. Yet MoPED could hardly plan future public expenditure if it was unaware of many projects that were already underway. While it was of little concern to some donors whether or not their projects were included in the Plan and Budget