The IDA is a section of the Bank that makes interest-free loans to the world's poorest countries.
"The reduction in IDA support from US$150 million to $125 million for PRSC [Sixth Poverty Reduction Support Credit] underlines the need for the government to consider ways of improving performance in budget execution, decentralisation and anti-corruption," Uganda's World Bank Country Manager Grace Yabrudy said.
She was speaking during the signing of two development credit agreements - US$125 million for poverty reduction and another $300 million for the expansion of the country's power sector.
Uganda's Finance Minister, Ezra Suruma, acknowledged that the government had spent more resources on administration than budgeted.
"In order to maintain peace and harmony, we had to spend some funds on the creation of new districts and elections. This pushed the budget on public administration up, but we don't expect this to recur," Suruma told IRIN.
Lack of efficiency
Yabrudy said Uganda's resource requirements for a sustainable, high growth and pro-poor development were far higher than the savings generated domestically.
"Uganda, therefore, needs to strive for maximum efficiency and impact from every shilling of available resources, and cannot afford to waste them away on ill-defined projects or activities, nor allow resources to be stolen or diverted," she added.
She said the cost of public administration significantly exceeded the approved budget, necessitating a supplementary allocation at the end of the 2005-2006 fiscal year.
However, she added, the World Bank was confident Uganda would regain its development momentum and "claim its rightful place as a high-impact, results-oriented, pro-poor development model".
The PRSCs aim to boost much-needed funding of key government services, such as universal primary education and healthcare. The funding also supports the Poverty Eradication Action Plan to extend social services in education, health, water and sanitation, and to combat corruption.
A number of financial scandals involving senior government officials have been exposed in Uganda during the last few years.
On 28 May, the former health minister, Jim Muhwezi, was charged and detained in connection with the alleged embezzlement of $1.63 million meant for the purchase of vaccines. Muhwezi's former deputies, Mike Mukula and Alex Kamugisha, are facing similar charges and were freed on bail on 25 May. Meanwhile, Alice Kaboye, an aide to President Yoweri Museveni, was also charged with embezzlement in May.
The three former health ministry officials were also incriminated in a corruption scandal involving grants from the Global Fund to Fight AIDS, Tuberculosis and Malaria. The scam caused donors to withhold funding in 2005.
Suruma said allegations of graft in the management of money from the Global Fund were under investigation.