EU joins national donors in freezing aid to Uganda over graft

Tue Dec 4, 2012 5:50am EST
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KAMPALA (Reuters) - The European Union (EU) has become the latest donor to suspend aid to Uganda alleging the embezzlement of $13 million in aid funds by officials in the Prime Minister's office.

The EU joins Britain, Germany, Ireland, Denmark and Norway which have already frozen funds to the east African nation.

Uganda's government has said it is determined to punish all the officials involved in the theft of money meant to help fund the recovery of northern Uganda, ravaged by the Lord's Resistance Army's two-decade insurgency.

Aid funds up to a quarter of the national budget.

The withholding of funds has also hurt the Ugandan economy through the shilling currency which has lost close to 4 percent of its value against the dollar, raising import costs, since Ireland first cut its aid in late October.

Central bank Governor Emmanuel Tumusiime-Mutebile told a news conference on Tuesday: "If all donors being reported to have cut their aid do cut their aid, we think that this will reduce the potential (economic) growth rate by about 0.7 percent."

Donors say a culture of impunity thrives at the heart of government for cronies of Uganda's long-serving President Yoweri Museveri.

"The recent corruption scandals and misappropriation of funds in the government of Uganda are a breach of trust," Roberto Ridolfi, the EU's ambassador to Uganda, told civil society groups in Kampala late on Monday.

EU officials in the Ugandan capital declined to say how much aid the bloc was withholding. Ridolfi said it would not pay out funds destined for budgetary support over the next six months until Uganda took steps towards combating graft.   Continued...