Is Uganda Caught up in a Public Debt Safety Trap?

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Posted by Linda Nakato and Enock Bulime^[1]

Uganda can expect to experience further increases in its fiscal deficit and public debt that will undermine its economic potential. This is largely due to fiscal complacency, profligacy, and incomprehensive debt sustainability diagnostics that mainly rely on ambiguous concepts such as the net present value of debt. Pressures from politicians, overly optimistic forecasts and pandemic-induced uncertainties also play a prominent role in explaining these dismal fiscal outcomes. This makes it hard to reconcile the alleged safety of Uganda’s public debt with a sharp rise in the debt stock.

A Proposal for Making Aid More Efficient and Effective

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Posted by Andrew Laing^[1]

Governments and their international partners are always looking for ways to make aid more efficient and effective. There are many dimensions to efficiency and effectiveness but an important one is to understand how important aid is to supporting government sector policies. The problem is that despite there being ample data, governments and donors do not routinely track and analyse how much aid is allocated to different sectors, and how this relates to government spending in those sectors. This happens partly because policy makers and donors use different systems for classifying their spending, which may also be denominated in several currencies, a further complication.

The central problem is that there are two different classification systems. Donors report aid to the OECD according to Development Assistance Committee – Creditor Reporting System (DAC-CRS) classification standards, while governments report their fiscal activity to the IMF according to Government Finance Statistics (GFS) standards. Hence, to be able to analyse aid and government expenditures by sector both datasets need to be comparable so that policy decisions are better informed.

Public Participation in the Budget Process: A New Approach

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Posted by Marianne Fabian, Suad Hasan and Juan Pablo Guerrero^[1]

 

Establishing effective public participation in the budget process is challenging. To assist in overcoming these constraints, governments can tap civil society as key partners in setting up mechanisms that incorporate both the government’s and citizens' perspectives on how to design and implement public participation. It has been shown that participation can help governments to better respond to the public’s needs and can facilitate more effective and efficient execution of public resources^[2].