UPDATE 1-Uganda infrastructure spend to power 2012/13 growth

* Uganda sees infrastructure spend buoying growth
* Sets aside $85.52 million to build 700 MW dam
* Aims to trim inflation to single digits in 2012/2013

By Elias Biryabarema
KAMPALA, April 26 (Reuters) - Uganda's rate of economic
growth is expected to rise slightly during the next fiscal year
as the country ramps up investments in transportation
infrastructure, energy and education, the finance ministry said
on Thursday.
East Africa's third largest economy projects its economy to
expand by 5.4 percent in the 2012/13 (July-June) fiscal year,
from an estimated 5 percent this year, boosted by increased
spending on infrastructure.
Africa's largest coffee exporter, hit by rising inflation, a
weakening currency and high interest rates last year, also will
focus on taming inflation while trying to boost economic
recovery, a budget framework paper showed.
Tight dollar inflows against soaring demand triggered a
plunge of the shilling which hit an all-time low of 2,901 per
dollar in September, while inflation soared to an 18-year high
of above 30.4 percent in October.
"The primary macroeconomic objectives for FY 2012/2013
includes reducing inflation to single digits and to promote
economic recovery from the recent slowdown in economic growth,"
the paper from the finance ministry showed.
"GDP (gross domestic product) growth is expected to
recover... due to the expected strong investments in
agricultural production and productivity, power and roads, and
restoration of macroeconomic stability," the ministry said.
One key project is the 700-megawatt Karuma hydro station, to
be developed on Karuma falls on the Nile, for which the
government has set aside 215 billion shillings ($85.52 million).
Although it aims to be a top-50 crude oil producer, Uganda
suffers a chronic power supply crisis which has long distressed
businesses, slowed economic growth and stymied development.
Last year, 24-hour-long power outages ignited a series of
riots across the country where the electricity supply deficit
currently stands at about 130 MW at peak demand.
These and other projects will push total government
expenditure to 10.1 trillion shillings in the 2012/13 fiscal
year, of which the government has 7.3 trillion shillings. The
remainder of the funding will come from direct budget support
and project financing, the paper showed.
The government expects to spend a projected 9.7 trillion
shillings in 2011/12, and has an estimated 7.2 trillion
shillings in its coffers.
The paper said the government is making plans on how to
spend revenue from oil production. British explorer Tullow Oil
has said it expects small-scale oil and gas production
later this year, and says it has found 1.1 billion confirmed
barrels of oil.