Uganda - Poverty reduction strategy paper annual progress report and joint IDA-IMF staff assessment

This report (herinafter, the Report), prepared through a consultative process, reviews Government's progress in implementing the Uganda Poverty Eradication Action Plan (PEAP) and serves as Uganda's third annual Poverty Reduction Strategy Paper (PRSP) progress report. The Report indicates that the Government has made satisfactory progress in implementing the PEAP, with improvements in access to education, health, and water and sanitation, and in the quality of some services. However, relatively high levels of poverty persist in some regions and among some groups, and mortality and HIV/AIDS indicators have not improved as expected. The Report recognizes that advances have been made with reforms aimed at stemming corruption and strengthening economic governance, but progress in the area of political governance has been slow. The Report reconfirms the Government's commitment to macroeconomic stability and a private sector, export-led growth strategy. It provides a balanced overview of macroeconomic developments in the past few years and the factors that have constrained growth and the transformation of the economy. In this connection, the Report notes the Government's concerns over the size of the fiscal deficit and the sustainability of Uganda's external debt. Staff welcome, in particular, the Report's focus on the need to raise revenues and reduce the growth of expenditures in areas that do not have a strong link to poverty reduction. The Report is candid about the weaknesses in implementing the PEAP, particularly at the sectoral level. However, staff note that despite the forthright assessment of these problems, the Report fails to link them to the overall PEAP strategy and does not identify the adjustments needed to address them. Staff recommend that the Government use the sector policy assessments to guide the revision of the PEAP. The Report does not present an updated macroeconomic framework nor does it identify and cost policy priorities for the near term. Looking ahead, staff urge the authorities to include such information and analysis in the revision of the PEAP.