The Fiscal Effects of Aid in Uganda

Sonja Fagernäs () and John Roberts

No 9, Working Papers from Economics and Statistics Analysis Unit (ESAU), Overseas Development Institute

Abstract: Working Paper 9 forms part of a set of four ESAU papers on the fiscal effects of aid in African countries. The others are on Malawi (Working Paper 7), on Zambia (Working Paper 10) and a literature Survey and Synthesis (Working Paper 11). The first, historical and analytical background, part of the paper contrasts the pre-1986 period of misrule, instability, conflict, the exodus of entrepreneurs and professionals, dwindling aid and economic decline, with the subsequent period when growth resumed, poverty fell, economic stability was restored, aid was substantial, and the government implemented budget management and pro-poor expenditure reforms. The second, econometric, part shows that the main effect of aid between the 1970s and 1990s was to increase development budget expenditure, with lesser positive impacts on recurrent budget expenditure and domestic revenue. The effectiveness of aid has therefore turned on the (rising) quality of development budget expenditure and on the (growing) credibility of accompanying economic policies.

Keywords: Fiscal; aid; aid effectiveness; Uganda; budget; economic growth (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-afr, nep-dev and nep-mac
Date: 2004-10
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Published as ISBN 0 85003 7379

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