Saved by the currency

Budget cuts. And more budget cuts. MS has twice this year faced economic reductions due to the Danish government’s priorities. In MS Uganda, the currency issue makes up for the loss

By Henrik Skafte, MS Uganda administrator

This year the budget for MS in Denmark has been cut even first by 6.5% and later with an additional 5%. The first cut was part of the Danish government’s strategy for development aid as a whole. The second one came as part of the passing of the financial bill.

The economic reductions can be seen as a reflection of the political reality in Denmark. The scene changed when the current right wing government took over from the former center-left wing government after the 2001 elections.

We saw the first signs of this in 2002 when the government cut the MS budget with 10% in the end of the year. This also resulted in a 10% cut in MS Uganda and the management had to act and make sure that our costs was decreased. The most significant change was that we cut staff significantly with the security staff and one driver.

In Denmark the government also started a review of the MS activities and strategies. After one year this review is now finished and MS in Denmark have now started to look into, what changes is necessary to meet the criticism and improve on the MS activities.

New cuts

MS in Denmark has of course worded their disapproval of the cuts and especially the way they were carried out. The criticism put forward has mainly been:

That the initial cuts in 2002 was done in the end of the year giving MS very little opportunity to react on the cost cut.
That additional cuts were carried out before the review was finalised.
That the cuts are done in two so that MS first reacted on the first cut, and just after they had finalised their budget adjustments a further 5% cut was required.

The changes in budget clearly shows that MS is under pressure to do more development with less money.

The 2003 cuts have mainly been met by cutting activities and staff in Denmark. On top of that a prioritisation of the countries have been made cutting costs in some programs but leaving some programs at status quo. Fortunately, MS Uganda came out on top of that prioritisation.

This means that although the general budget of MS has been decreased with 11,5% for next year, MS Uganda will maintain the budget on approximately the same level of this year. This however will not cater for increases in price and salary level, which is currently about 5-6% pr. year in Uganda.

The currency relationship

Luckily we have been helped by the currency relationship between the Danish Krone and the Uganda Shilling.

At this time last year the currency relation was so, that when MS send 1 Krone to MS Uganda we received just less than 240 Shillings – today we receive just above 300 Shillings. So while the budget in Danish Kroner has been maintained at status quo we have had an increase in the budget in Uganda Shilling.

This means that in MS Uganda no immediate actions are necessary. But we are not yet safe. The political situation in Denmark is still asking for changes in MS. The government is focusing on cost effectiveness and for better ways of doing development.

MS Denmark has therefore started different projects to review the strategies on development and the effectiveness in the administration of MS.

This has both exiting opportunities and obvious threats but the management in MS Uganda believes that we are able to utilise the changes to do things in a better way, so that MS Uganda will come out of this situation better and stronger.