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Wednesday
Dec192012

Uganda: fiscal discipline and cash management

Summary

  • 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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