The Ugandan economy heavily relies on the agriculture sector for its employment (accounting for 72% of the economically active population), but services and manufacturing contribute the lion's share of Uganda's GDP. The country has moved away from a state-controlled to a liberalized economic model particularly since 1992 when it put the private sector and open market competition at the center of economic policy. xviii. The Government of Uganda has made efforts to promote export competitiveness and diversification. The Government has liberalized the exchange rate market to facilitate trade, including the progressive depreciation of the Ugandan Shilling, which ordinarily should support the export sector. However, in Uganda's case, the continuous depreciation of the Shilling has not led to much improvement in exports while domestic borrowers face higher cost of repayment of foreign denominated debts. xix. Sound management of public resources is paramount for meaningful development, and the Government of Uganda has made persistent efforts to ensure transparency and accountability in this field. However, these efforts have not yielded expected results, not least because of the widespread scourge of corruption in the country and what many stakeholders perceive to be insufficient political will to address it aggressively. CRM noted a lot of efforts that have been directed towards proper auditing of all public institutions in the country through the Office of Auditor General (OAG), which is doing a commendable job. For instance, as at 31st December 2016, a total of 1,417 audits, including 1,323 financial audits, 83 forensic investigations, eight value-for-money audits, and three specialised audits had been completed and reported on, while 802 financial audits and three value-for-money audits were still in progress. However, the Country Review Mission also found that financial constraints hindered OAG's performance in auditing local Government offices and schools. xx. The performance of domestic resource mobilization in Uganda has improved significantly since the establishment of the Uganda Revenue Authority (URA) on 5 September 1991, the oldest integrated revenue authority in sub-Saharan Africa. And the Government has introduced different reforms to increase its tax revenues. However, the tax-to-GDP ratio is stuck between 12% to 14% and Uganda remains one of the largest recipients of official development assistance (ODA) in the world, with aid-toGDP hovering around 10%. This state of affairs has impacted the government's implementation of many of its policies, including allocation of resources to local government. The CRM also found that the Uganda Revenue Authority needs to build its capacity further in order to be able to detect, tackle and deter tax evasion practices by powerful people in the country as well as multi-national and large companies. The URA might also need to consider developing strategies to bring as much of the informal sector as possible into the tax net. APRM COUNTRY REVIEW REPORT xvii. xxi. Another challenge relates to the abuse of the regulatory incentives created by government in order to attract particularly foreign investment. It is remarkable that the fiscal balance of the Ugandan economy has shown significant deterioration over the years, from -1.9% of GDP in 2007/8 to -4.0% in 2009/10 to a slight improvement in 2011/12 at -2.5% back to a further decline of -4.9% in 2015/16. The Penal recommends that the Government make every effort possible to expand the tax base, close regulatory loopholes for tax evasion and illicit financial flows, and further enhance its tax collection capacity. xxii. Uganda has discovered commercial deposits of oil, currently estimated at about 6.5 billion barrels. Once production commences, this will have a significant impact on Uganda's fiscal balance, but we also know that oil revenues can bring with them undesirable economic ills. To mitigate the potential adverse effects and maximize the benefits, the Government of Uganda has put detailed plans in place to ensure all oil money goes to capital investments rather than recurrent government expenditure. While this is naturally to be commended, the Panel wishes to emphasise that not many countries have managed to avoid the “oil curse” on the basis of advance planning alone; the main challenges lie at the stage of implementation, once the oil money has started flowing into the coffers of the state treasury. The Panel thus recommends that the Government remain vigilant and ensure its policies are informed by the experiences of the few countries that have successfully harnessed oil revenues for sustainable development. xxiii. CRM consultations as well as factual evidence suggest that some sectors of Uganda's economy are highly controlled by foreign-owned businesses. While this might not necessarily be a problem for the economy, the CRM was given the impression that many Ugandans see it as a potential problem, so much 4