Saturday, 24 October 2015


Government cheques issued for civil servants salaries bounce

Deputy Secretary to the Treasury says government cheques bounced as the Treasury struggled to pay salaries for July because Uganda Revenue Authority had not remitted funds to the Consolidated Fund.


Government cheques issued for civil servants salaries bounce

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By Yasiin Mugerwa

Posted  Wednesday, October 14  2015 at  01:00
PARLIAMENT. Cheques issued by the government through Bank of Uganda for civil servants’ July salaries, bounced due to insufficient cash in the Consolidated Fund, a senior finance ministry official said.

Deputy Secretary to the Treasury, Mr Patrick Ochailap, told a House committee that government cheques bounced as the Treasury struggled to pay salaries for July because Uganda Revenue Authority had not remitted funds to the Consolidated Fund.

The official also suggested that because of mistakes in the Public Service Ministry, thousands of pensioners who have not been paid for months will have to wait a little longer to get paid. The government had last week committed to pay all pensioners’ dues this week.

Although the current law (Public Finance and Management Act, 2015) which is expected to be amended today, prohibits BoU from giving advances to government without the parliamentary approval, Mr Ochailap said, after the cheques bounced, they had no choice but to request BoU to give government a temporary advance, which it would pay back later, to cover the salaries. 

“We did not raid Bank of Uganda to obtain a temporary advance,” Mr Ochailap said. “We simply asked Bank of Uganda to apply the BoU Act because there were insufficient funds in the Consolidated Fund to pay salaries. We needed Shs600 billion but the [tax] collections covered only Shs420 billion.” 

The government now wants the public finance law amended to allow it, among other disputed amendments before Parliament, access to at least 18 per cent of the recurrent government expenditure as “temporary advances” from BoU.

However, Civil Society’s Budget Advocacy Group (CSBAG) activists led by their coordinator, Mr Julius Mukunda, who presented their views before the Finance Committee yesterday, complained that the proposed government amendments will “perpetuate the abuse of public funds”.

“From the amendments proposed, it is clear that the intention of the Executive is to loosen controls that were put in the PFMA 2015,” Mr Mukunda said. “Removing controls in PFMA has potential to perpetuate gross abuse of public resources... the amendments give discretionary powers to the Executive outside Parliament’s authority.” 

CSBAG and some MPs also warned that the proposals would undermine the oversight role of Parliament and potentially allow BoU to print money for fiscal use which is an undesirable public finance move. 

The MPs also heard that unless Parliament sitting today to consider the amendments accepts to change the law to allow Ministry of Finance to shift money from one vote to another, the money in the Contingency Fund (a sub account created by the current law from which the government can draw money outside of strict budget votes) will not cover the Shs50 billion to Shs60 billion needed to pay the pensioners. 

The contingency fund to cover unplanned expenses was established to cure the perennial problem of supplementary requests. 

Asked why government seems to be so unusually out of pocket, Mr Ochailap said: “We have the money for pensioners but some votes received more than others. This mistake was done by officials in the Ministry of Public Service not Ministry of Finance. We brought the amendments to Parliament because we want to move money from one vote to another so as to address these challenges.” 

But MPs led by Jack Sabiiti (Rukiga) and the Budget Committee chairperson Amos Lugoloobi, however, said, the proposed amendments erode the mandate of Parliament to appropriate resources in the Budget and insisted that “some of the proposed amendments are calling for chaos”. 

“If there is no money in the Contingency Fund, what stops you from coming to Parliament and we give you money?” Mr Lugoloobi asked. “These proposals came from you to stop leakages and abuse of public funds. We cannot bring back inefficiency.” 

The law which is being amended was assented to by the President on February 23 after the government failed in its attempts to repeal the Budget Act, 2011 which would have rendered Parliament’s Budget Office redundant. It took the intervention of Speaker Rebecca Kadaga and other outspoken MPs to stop government’s plan, which former Public Accounts Committee chairman Nandala Mafabi and others said would have undermined the role of Parliament in the budgeting process. 

Mr Mathias Nsubuga (Bukoto South) said: “I am disappointed with the government. It took us time to make this law but hardly a year, they want it amended to create another group for supplementary budgets because the appetite for money is high. This is wrong.”

Although the current law says supplementary budget are drawn from the contingency fund, the government wants to create another window for supplementary budgets. They want the law amended to provide that where funds are insufficient to finance the supplementary budget, the supplementary shall be financed by a re-allocation of the funds of the annual Budget but without the safety valve of parliamentary appropriation. MPs said this takes away the constitutional mandate of Parliament in the allocation of public funds.
Yesterday, the Finance committee rejected a government proposal to repeal the certificate of gender and equity under Section 13 (15) (g) of the current law act after women activists and Equal Opportunities Commission complained that this would be a huge disappointment to the equity, gender and women’s rights fraternity.

Junior minister for Planning, Mr David Bahati, who was at Parliament to defend the government amendments ahead of today’s special sitting, said: “We wanted MPs to be aware of the challenges we have faced in the implementation of the law.” 

Last evening, BoU declined to comment on why they agreed to advance money to the government without the parliamentary approval as is required by law.

BoU Communications director Christine Alupo told Daily Monitor: “Please refer the inquiry to the Ministry of Finance, Planning and Economic Development.”

Budget Act, 2001
Speaker of Parliament Rebecca Kadaga in 2012 appealed to MPs to block attempts by Ministry of Finance to cancel the Budget Act, 2001, saying Parliament would be rendered irrelevant in the budgeting process. Government’s draft Public Finance Bill, 2012 (now PFMA) sought to repeal the Budget Act 2001. But MPs agreed with Ms Kadaga that it would undermine their role in the budgeting process. The MPs would later vote to maintain the Budget Act.

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