Constitution:Seventh Schedule - Grant to local governments

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[edit] Seventh Schedule (article 193)

[edit] Unconditional grant to local governments

Unconditional grant is the minimum amount to be paid to the local governments to run the decentralised services. For a given fiscal year, this amount is equal to the amount paid to local governments in the preceding fiscal year for the same items adjusted1 for general price changes plus or minus the budgeted cost of running added or subtracted services; calculated in accordance with the following formula—

Y1 = Yo + b Yo + X1

= (1+b)Yo + X1

Where—

Y1 is the minimum unconditional grant for the current fiscal year;

Yo is the minimum unconditional grant in the preceding fiscal year;

b is the percentage change, if any, in the general price levels in the preceding fiscal year; and

X1 is the net change in the budgeted cost of running added and subtracted services in the current year.

For the purposes of this formula the current fiscal year shall be taken to commence with fiscal year 1995/96.


1 Note that the unconditional grant is equal to the sum of wage and nonwage components. Therefore, the wage components should be adjusted for the wage increase, if any, while the nonwage component is adjusted for the changes in the general price levels.

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