This report is a further response to thecall from Uganda's leaders for 'value formoney' in public spending. The report is the second ina series of three sector-oriented public expenditure reviews(PER) for the Government of Uganda (GOU) prepared by theWorld Bank as input into the Government of Uganda'sbudget reform initiatives. The focus of this report isefficiency and efficacy of spending by the Government ofUganda with a specific focus on the health sector. The firstreport in the series was 'Uganda fiscal policy forgrowth', published in 2007, with a focus on theeducation sector. This report comes in two volumes. Volumeone is the main report with conclusions and policyrecommendations which analyses composition of overallspending and budget implementation, budgetary consequencesof ongoing pay reforms, and efficiency and effectiveness ofspending in Uganda's health sector. Volume two containsa full report on the health sector, and includes thebackground papers prepared.