* Opposition says misuse of resources
* Govt defends purchase, says region unstable
* Uganda clashed with Congo over Lake Albert basin
KAMPALA, April 7 (Reuters) - The Ugandan government's decision to spend $720.6 million on Russian fighter jets has been criticised by the opposition as a misuse of resources at a tike when key priorities remain starved of fcunds.
Information Minister Kabakumba Matsiko defended the deal, despite the 1.7 trillion shilling cost, saying on Thursday the fighters were needed to counter potential threats resulting from instability in the region.
Uganda has been keeping a wary eye on South Sudan and eastern Democratic Republic of Congo (DRC) on its northern and western flanks respectively, where low-level unrest still festers after decades of brutal wars.
Uganda itself keeps numerous troops in Central African Republic (CAR) and northeastern Congo to hunt for Lord's Resistance Army (LRA) rebels who waged a long-running insurgency against Kampala and are now roaming the jungles there.
"The executive arm of government which is mandated with the security matters of this country took a decision to buy these jets because we need them," Matsiko told Reuters.
She declined to give more details of the "highly sensitive and classified matter," or to say how many jets were ordered.
Local media have reported that the government has withdrawn more than half the money for a down payment on the jets from central bank reserves without parliamentary approval.
The government now wants parliament to approve the expenditure retrospectively. "Although the money was not allocated in the 2010/11 financial year, parliament will approve it in the form of a supplementary budget and this is normal,' Matsiko said.
Opposition politicians say buying the fighters is an example of government waste and misuse of resources while key priorities remain starved of finance.
"A government that stealthily withdraws money from the consolidated fund (treasury) and spends it on war machines while its hospitals lack essential drugs -- how can one describe that government? Insanity," said shadow finance minister Oduman Okello.
Uganda discovered oil in commercial quantities in 2006 in the Albertine Rift Basin on its border with Congo. The two countries share the basin.
Tension flared in 2007 when armed Congolese killed a geologist contracted by Heritage Oil after accusing the company of prospecting in their territorial waters. (Reporting by Elias Biryabarema, editing by Tim Pearce)