• Macroeconomic policy co-ordination in Uganda aims to ensure that the Government budget is financed in a way that is compatible with low and stable inflation.
• There are two main phases of macroeconomic policy coordination: the first, during budget preparation, is coordinated through the Macroeconomic Framework; and the second, during budget execution, is co-ordinated through management of Government cashflow and by setting quarterly limits on Government expenditure.
• The close working relationship between the Central Bank, Uganda Bureau of Statistics and the Ministry of Finance has been an essential component of Uganda’s success in macroeconomic policy co-ordination and management over the past 18 years.
• This relationship between the Ministry of Finance and each of the other institutions whichestablishes the basis for their co-ordination across a range of macro and fiscal issues.

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• Explicit political backing for fiscal discipline has been central to the success of Uganda’s cash management system, which has proved an effective tool in maintaining fiscal discipline and delivering low and stable inflation for almost two decades.
• Cash management ensures that overall Government spending and Central Bank borrowing during the financial year remain within the limits set in the approved budget.
• It uses rolling monthly and quarterly forecasts of resource availability to establish cash limits on expenditure, and prevents the Government from financing revenue shortfalls during budget implementation by borrowing from the Central Bank.
• However, it only controls overall fiscal discipline, and is not a tool for delivering budget credibility, in terms of ensuring that the budget is implemented as planned at sectoral level.

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• Uganda’s Parliamentary Budget Office plays an important role in supporting parliamentarians to scrutinise the national budget. It is one of only a few such institutions in Africa.
• The Parliamentary Budget Office provides quarterly reports on the economy and detailed sectoral analysis of the national budget for the parliamentary committees. It also provides ad hoc advice on budget, fiscal and economic policy.
• Much of the Parliamentary Budget Office’s work takes place during the budget preparation and appropriation period (April to August), when it reviews the Budget Framework Paper, detailed budget estimates and Ministerial Policy Statements. On the basis of its findings, it advises Parliament on budgetary issues and makes key recommendations for the Executive.
• Setting up the Parliamentary Budget Office under the 2001 Budget Act was not an easy task, because of political resistance at the time to any strengthening of Parliament. It was eventually established following significant pressure from parliamentarians.
• Although the Parliamentary Budget Office has proved valuable in demystifying the budget process for Parliament, it faces a number of operational and institutional challenges. These need to be overcome, in order to strengthen its role and improve the quality of parliamentary scrutiny of the budget.

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• The Implementation of the Integrated Financial Management System (IFMS) was motivated by the Ugandan Government’s desire to improve efficiency in budget preparation, execution and financial reporting.
• Since 2003, the IFMS has been extended across all 22 ministries and 25 central government agencies. The IFMS has also been implemented in 8 local Governments with plans to extend it to 6 more districts as part of the first tier  IFMS implementation. Using a lower (second) tier solution which offers less complexity, the Government intends to further extend the IFMIS to all local governments . The second tier project implementation (based on MS Navision) has recently commenced. The discussion in this note is limited to the first tier IFMS implementation     
• The implementation of the IFMS has enabled the Government to address many of the fiduciary issues faced prior to 2003. This has led to: greater expenditure control and discipline in budget management as a result of improved oversight and enforcement of internal controls; a reduction in the time taken to process payments; improvement in account reconciliation; and more accurate and reliable financial reporting.

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• Electronic Funds Transfer (EFT) is a system for transferring money from one bank account to another electronically, minimising the need for human intervention.
• In July 2007, the Government of Uganda began using EFT to transfers payments to its suppliers of goods and services by crediting their accounts directly through the banking system. EFT has now been extended to the full range of Government financed payments for central ministries and agencies.
• This shift from the use of physical cheques has achieved three things: it has enhanced security of the Government’s payment process as manual interventions have been reduced and loss or forgery of paper payments instruments of cheques has been eliminated; it  reduced cost of operations particularly accruing from printing cheques, it improved efficiency in cash management with the elimination of a cheque float as the period it takes to transfer funds to beneficiaries has significantly reduced. 
• A major risk of the current system is the irrevocability of the of an EFT payments once it has been made, even when an error could has occurred in this process. Unlike in countries like South Africa, the current Ugandan system offers no protection against such risks. 
• Careful planning has been a critical factor in the successful implementation of the EFT, as has close collaboration between the Ministry of Finance, the Bank of Uganda and the commercial banks. 

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• The Government of Uganda has introduced performance contracting, budget reporting and budget monitoring to improve accountability and as a part of wider efforts to improve service delivery.  
• A performance contract is a signed agreement between the Accounting Officer of a spending agency and the Permanent Secretary of the Ministry of Finance declaring the intended use of public funds.  Each quarter a Performance Report must be submitted to the Ministry of Finance outlining progress against a workplan.  
• The Government produces a budget performance report on a semi-annual basis which presents information on financial and physical performance. It is used to guide decision-making and influence the budget process. 
• The Budget Monitoring and Accountability Unit was established to monitor priority projects and programmes.  This involves physically inspecting and verifying the information in performance contracts and quarterly performance reports.

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• In 2011 the Government of South Sudan updated the country’s official Aid Strategy. This new strategy responded to several key aid coordination challenges encountered since the publication of South Sudan’s first Aid Strategy in 2006.
• The timing of the 2011 Aid Strategy coincided with growing international consensus on how to improve the effectiveness of aid to fragile states. This consensus culminated in supranational groups such as the International Dialogue on Peacebuilding and Statebuilding and the g7+ group of fragile states advocating for the New Deal for Engagement in Fragile States. 
• The principles of South Sudan’s 2011 Aid Strategy aligned well with those of the New Deal. Although it was not the direct impetus for the development of the 2011 Aid Strategy, the New Deal helped to reinforce and legitimise many of the proposed changes that the strategy outlined.

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• Compacts between governments and development partners have been identified as an important tool for implementing the New Deal for Fragile States.
• In 2009, South Sudan faced a crisis sparked by the rapid drop in the price of oil and a concurrent rise in food prices. This situation required a joint response from the Government and development partners which resulted in the creation of the 2009 Juba Compact.
• While the original purpose of the Juba Compact was to coordinate donor and Government responses to the crisis, it rapidly evolved into a mechanism for examining a wider range of governance and transparency issues.
• There are a number of lessons that can be drawn from South Sudan’s experience of the Juba Compact. These are: keep it simple and focused; stick to a relatively short horizon with realistic timelines; do not be overambitious; and fragility should not lead to unrealistic concessions.

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• The establishment of Single Project Implementation Units (SPIU) allows for the grouping of all the different project implementation units within a ministry under one single umbrella. This helps to better coordinate work, retain staff expertise and reduce duplication of work.   
• The success of an SPIU is dependant on the involvement of senior government officials, managerial expertise within the unit, and willingness of development partners to use the SPIU structure.
• The Ministry of Health has exemplified good practice through the management of several Global Fund projects in the SPIU structure. The ministry is now moving projects funded by other development partners under the same SPIU.
• Establishing of SPIUs is not a ‘quick win’. They require highly qualified project management staff to implement successfully and there is often a lengthy period of transition as individual project implementation units are phased out and new SPIUs are tested.

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• The most important ingredient for developing good sector strategies was leadership demand from within the sector ministry (and occasionally from donors). Help from the Ministry of Finance and Economic Planning (MINECOFIN) in developing sector strategies was not seen as decisive in the success of the strategies.
• By early 2011 most sectors had developed a good strategic plan, though this has been uneven across sectors.
• The separation of the planning and budgeting functions within both MINECOFIN and other ministries has created difficulties for the development of sector strategies.
• The Sector Wide Approach can be useful in well-defined sectors with strong leadership from the government (e.g. education).  In more ‘complicated’ sectors, a less heavy approach may be preferable.
• Problems with the coordination of aid are felt most keenly in sectors where project support dominates. Progress in solving coordination issues has been made when donors have moved to sector budget support and pooled funding (especially in education and health).

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