Public Finance Management Act Worsens Misuse of Funds-UDN

Uganda Debt Network submits that rather unprecedented, the Public Finance Management Act (PFMA) that was assented to by the President on 23rd February and received by Parliament on 26th February 2015, barely 8 months has again been presented by the Executive to Parliament for amendment. The proposals seem to undermine further integrity of Government and public finance accountability in Uganda.
PFMA was well received in streamlining and promoting equity, including gender equity and accountability in such areas: Charter for Fiscal Responsibility and any deviations thereof, fiscal prospects in national budget and forecasts of macroeconomic developments.
Also: how best Accounting Officers should manage sector budgeting, expenditure commitments, raising loans, giving strong Parliamentary oversight, coupled with clearer checks and balances across Government. Amending Section 82 of PFMA, to give Bank of Uganda (BOU) powers to make temporary loans to Government and Local Governments, without approval of Parliament, undermines the 1995 constitution of Uganda which compels all loans to be approved under Parliamentary oversight.
PFMA is already trying to cure the disease of Executive siphoning out public funds from BOU without due approval as often highlighted by Office of the Auditor General. The proposal risks stretching BOU through loans to Government for fiscal management.
This disempowers BOU capacity to manage its assets and finances for monetary purposes which is the primary function of BOU. We risk conflict and directives from Executive over the already increasingly challenged BOU operations. BOU temporary advances, e.g. to Executive for budget execution functions like elections could trigger inflation, printing of money, shilling depreciation, increased public debt and macroeconomic management instability.
BOU independence should be shielded from undue dominance by Executive through ministry of finance. Cases of fiscal gaps cannot sustainably be addressed by loans from BOU, rather the Executive should do budget cuts, phased implementation and at austerity measures in a given financial year. To propose in Section 36 of PFMA that Government can acquire any loan that does not extend beyond a financial year without Parliamentary approval is disaster.
Government previously has abused this window. So, let Parliament approve all loans as provided for by law and regulations; as the practice across East African Community States. PUBLIC FINANCE MANAGEMENT ACT 2015 (AMEMNDMENTS) BILL RISKS UNDERMINING PUBLIC ACCOUNTABILITY IN UGANDA From now on, Parliament will be expected to pass the Charter for Fiscal Responsibility and any deviations thereof, in view of the National Development Plan, Vision 2040 and Manifesto of a given ruling party.
To amend Section 22 of PFMA, for virement (shifting of budget resources) beyond 10% clearly undermines planning in Uganda. A 10% deviation in cases of a big budget portfolio means serious deviation from plans. This has previously raised supplementary budgets and perpetuated financial indiscipline, especially through excuses for recurrent expenditure. Proposing in Section 17 of PFMA that Government institutions that do not fully utilize funds in a given financial year, be allowed by Permanent Secretary/Secretary to the Treasury to retain funds up to 31st October of the next financial year is a loss of confidence in Parliamentary budget approval process. More abuses beyond the Consolidated Fund will be extended to wider institutions of Government.
It worsens misuse of public funds, as noted by the Auditor General every year. It perpetuates poor planning in Government and Ugandans should not allow this; so that they are not denied actual service delivery. To drop a Certificate of Gender and Equity under Section 13, means that Government is taking for granted the cause for gender and regional equity. This not only undermines the very essence of Equal Opportunities Commission but also discards the hard earned gender mainstreaming gains registered since the introduction of affirmative action in Uganda-Source UDN

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