MPs demand tighter controls on donor-funded projects as absorption gaps persist

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Members of Parliament on the Budget Committee have urged the government to ring-fence and centrally monitor counterpart funding for externally funded projects to curb persistent delays, cost overruns and low absorption of funds.

According to the Committee’s report on the latest review of the Multi-Year Commitment (MYC) Statement for the 2026/27 financial year, presented alongside the national budget estimates, legislators noted that the government’s share in jointly financed projects has become a major bottleneck in implementing Uganda’s public investment programme and therefore needs review.

“Inadequate counterpart funding remains one of the most persistent causes of delayed disbursement and poor absorption,” the Committee noted, calling for funds to be ring-fenced and placed under central monitoring to ensure timely availability.

According to the report, Uganda’s Public Investment Plan (PIP) for Financial Year 2026/27 to Financial Year 2030/31 currently comprises 357 projects valued at sh138.2 trillion.

Of this, 57 percent are externally financed, an indication of the country’s continued dependence on development partners to deliver large infrastructure and social programmes.

While the government has prioritised completion of ongoing projects, which account for nearly 86 percent of the portfolio, lack of funds has limited its ability to meet all domestic obligations, including counterpart contributions required to complete the projects on time.

Presenting the report, Committee deputy chairperson Achia Remigio told Parliament that without timely counterpart funding, projects face stalled implementation, delayed disbursements from lenders, and accumulation of interest and certificate arrears.

Achia said that while scrutinising documents from the Ministry of Finance, the Committee was informed that recent performance trends reveal significant gaps between budget allocations, releases and actual spending.

In Financial Year 2024/25, the Committee was informed that although sh78.4 trillion was approved for multi-year commitments, only sh14.2 trillion was released.

“Actual expenditure stood at sh9.8 trillion, translating into an absorption rate of 68.8 percent. For development projects specifically, absorption dropped further to just 43 percent,” Achia said.

MPs warned that such trends not only slow service delivery but also undermine value for money in public investments.

“These weaknesses in execution are not just technical—they directly affect service delivery outcomes and the credibility of the budget,” Achia warned.

To address the bottlenecks, legislators said there is need for a more coordinated approach in managing counterpart funds, including centralised tracking by the Ministry of Finance.

“Ring-fencing counterpart funding will ensure that once a project is approved, government obligations are not crowded out by competing priorities,” the Committee emphasised.

The MPs argued that predictable and protected funding streams would enable implementing agencies to meet financing conditions set by development partners, thereby accelerating project execution and improving absorption rates.

Beyond counterpart funding, Parliament also recommended tightening the link between project approvals and available fiscal space, ensuring that no new project is admitted into the PIP without clear financing provisions within the Medium-Term Expenditure Framework.

Legislators further called for improved procurement discipline, better project readiness at entry, and enforcement of certified project management standards to tackle inefficiencies that continue to plague public investments.

The MPs also asked the government to prioritise completion of high-impact ongoing projects, particularly in transport, energy and human capital development, before taking on new commitments.