KAMPALA, Dec 4 (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.
External financing was expected to account for roughly a
quarter of Uganda's 11.2 trillion shillings ($4.2
billion)budgetary spend this fiscal year (July-June), the
2012-2013 budget showed.
Cuts to budgetary assistance could hurt public investments
in health and education.
Ridolfi said the EU would initially suspend aid for six
months, giving the Ugandan government time to return the stolen
funds to donors, create a more robust public finance system and
prosecute officials guilty of theft.
"For the EU in practical terms this means that funds
earmarked as EU budget support to the Ugandan fiscal year
2012-13 will not be paid until satisfactory progress has been
confirmed on the points above," Ridolfi said in his speech.
Uganda's leading Daily Monitor newspaper on Tuesday quoted
Ridolfi warning that "Ugandan citizens are going to lose close
to $300 million in budget support" from eight development
partners.
At least 12 officials have been suspended since the
country's attorney general released a report in October
revealing the funds were missing.
($1 = 2680.0000 Ugandan shillings)
(Reporting By Elias Biryabarema; Writing by Drazen Jorgic;
Editing by Richard Lough/Ruth Pitchford)