Uganda expects foreign donors to restore aid, which makes up a quarter of its budget, after the government pledged to refund stolen and embezzled funds and to prevent future pilferage, it was reported at the weekend.

Reuters reported that major western donors including Britain, Uganda’s biggest bilateral source of aid, suspended their financial support to the east African country toward the end of last year after allegations $13 million worth of aid had been embezzled.

The money was meant for financing reconstruction projects in the north and northeastern parts of the country, ravaged by years of a rebellion by the Lords Resistance Army.

“We’re confident that with all the measures we’ve taken donor disbursements will resume in the second half of this year,” Keith Muhakanizi, deputy secretary at Ministry of Finance told a news conference, referring to the fiscal year that ends on June 30.

“We’re fully engaged with donors on a day-to-day basis and our reforms will trigger release of (aid) funds.”

But things may be much harder than they thought. It is understood that the US Fiscal Cliff may have been avoided but the cut in budgets and spending could affect the country’s programmes of aid.

Europe is currently concerned about its Eurozone crisis which continues to grind on. Providing aid to Africa is certainly not one of their priorities.

Renewed aid would support the shilling currency which hit a 14-month low last week. The Ugandan economy depends heavily on the donations as a source of foreign currency.

Muhakanizi said the government had started removing loopholes in public finance laws that encouraged fraud, conducting special audits in six big-spending ministries and freezing assets of officials accused of embezzling funds.

The government has previously said the cuts would leave it about $260 million short of the money it needs to cover planned 2012/2013 spending. The central bank says the aid freeze will shave 0.7 percent off Uganda’s economic growth.