Uganda government plans budget cut after aid freeze -
http://bit.ly/UghxND
Quote:The Ugandan government will review this financial year’s Budget to make adjustments in light of hundred-million dollar cuts in direct aid by the country’s development partners. Until yesterday, some government functionaries had been maintaining that the government would somehow manage even without the development partners’ financial support.
“The donor aid cut is equivalent to 1.3 per cent of Uganda’s GDP, while the total amount of aid cut by the donors stands around $180m out of $200m that was supposed to be provided by the major development partners.”
Donors fund 25 per cent of Uganda’s 2012/13 budget by $4.5b (Shs11.2 trillion). Over the last three weeks, some of Uganda’s development partners had suspended close to $180m (Shs450b) in development aid following revelations by the Auditor General that Shs50b is believed to have been stolen by some officials in the Office of the Prime Minister.
I expect the UG econ to take it in the chin as austerity pills get served, which means the UGX will also take a hammering. Those Umeme EA and foreign IPO investors had better get ready to take in forex losses when converting from UGX to other ccys on cashing out.
KE should take a note of this esp now that the election mood is in full swing and UG also happens to be KE's huge export market. Those twin effects are not what the treasury wants to face next year on the back of a weakened KE econ.
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!