Sunday, 31 March 2013 23:56
This year, State House wants to spend
Shs 128.5bn on projects like poverty alleviation, allowances,
advertising and public relations, staff training books and periodicals,
welfare and entertainment, printing, stationery and photocopying. Other
expenses include general supply of goods and services, inland travel,
carriage of, haulage, freight and transport hire and maintenance of
machinery, equipment and furniture.
State House accounts for the largest
share of the Shs 546.0bn supplementary budget for the non-wage recurrent
expenditure for the FY 2012/13 lodged with Parliament last week. And
the Office of the President needs Shs 6bn in additional funding, on top
of Shs 92.8bn which Parliament approved last year, while the ministry
of Defence asked for a supplementary of Shs 43bn.
Others are; ministry of Education and
Sports, which wants Shs 8.7bn in additional funding. Health requested
for Shs 5.3bn, ministry of Trade, Industry and Cooperatives Shs 3.5bn
(65%), Uganda Police Shs 22.7bn, Uganda Prisons Shs 13.1bn, External
Security Organization Shs 1.8bn.
The ministry of Foreign Affairs is
looking for Shs 3.6bn and Shs 63bn to "reinstate the funds that were
used to host the International Conference for the Great Lakes Region
(ICGLR); the ministry of Agriculture, Animal Industry and Fisheries
asked for Shs 13bn." The National Medical Stores asked for (Shs 2bn),
Uganda Registration Services Bureau (Shs 2bn) National Citizenship &
Immigration (Shs 3.9bn) and Directorate of Public Prosecutions (Shs
1bn).
Others include Uganda's missions abroad;
London (Shs 43bn), Ottawa (Shs 17bn), Abuja (Shs 275m), Beijing (Shs
287m), Canberra (Shs 59m), Abu Dhabi (Shs 5.8m), Bujumbura (Shs 55.8m)
and Guangzhou (Shs 33m).
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A GUIDE TO THE BUDGET PROCESS
ENSURING THAT UGAND’S BUDGET REFLECTS
THE VIEWS AND PRIORITIES OF CITIZENS
MINISTRY OF FINANCE, PLANNING AND
ECONOMIC DEVELOPMENT
2009
1. WHAT IS A BUDGET?
The
budget of Government is a statement of the revenues the Government expects to
collect over the 12 months, and how it plans to spend those revenues.
The main purpose of the budget is to:
1.
Help in increasing the production of goods
and services so that the average standard of living improves rapidly and
poverty is correspondingly reduced (economic growth).
2.
Macroeconomic Management – promote economic
order and stability by encouraging competitive efficiency and controlling
inflation (macroeconomic management).
3.
Provide services which are vital to our
country and which only Government can do best, namely, security, law and order,
infrastructure and disease control (service delivery).
Planning Framework
The
national budget is guided by the Poverty Eradication Action Plan (PEAP)
Uganda’s national development framework and medium – term planning tool since
1997.
The
PEAP was revised and independently evaluated in June 2008 and replaced by the
National Development Plan (NDP). The NDP
is a comprehensive plan that articulates clearly the planned strategic
interventions of all sectors of the economy.
Sources of Financing the National
Budget
The
budget is made for a financial year which begins on 1st July each
year and ends on 30th June.
The budget is financed from three main sources:
i.
Taxes:
Tax revenues collected by Uganda Revenue Authority (URA) which include income
tax, customs duties, consumption taxes;
ii.
Non
Tax revenue: Fees (for example from Passport and
Immigration fees) and Licences,
iii.
Loans
and Grants: Loans are Concessional credits provided by
multilateral agencies; while Grants are mostly from bilateral development
partners.
2. THE LEGAL FRAMEWORK FOR THE BUDGET
PROCESS
The
Legal framework for the budget process is enshrined in the Uganda Constitution
1995, the Local Government Act 1997, the Budget Act 2001 and the Public Finance
and Accountability Act 2003.
Articles
155 – 158, Chapter 9 of the Constitution
of the Republic of Uganda 1995 provide the legal basis for the preparation
and approval of the national budget.
Articles 190 – 197 on the other hand provide for the finances of the
Local Governments.
The
Local Government Act, Cap 243
provides the legal basis for local government budget process. This is supported by the Local Government
Financial and Accounting Regulations 2007.
The
Budget Act, 2001 on the other hand
provides for and regulates the budget procedure. It explicitly spells out the roles of
Parliament, Executive as well as other stakeholders and stipulates the budget
calendar and the requisite documentation.
The
Public Finance and Accountability Act
2003 provides for the development of fiscal policy framework, regulation of
public financial management, prescribes the responsibilities of persons
entrusted with financial management and provides for public borrowing, audit of
Government accounts, state enterprises and other authorities of state.
The Budget Process
The
budget is prepared through an open and transparent and widely participatory
process. The objective of the
consultative process is to solicit the views of all stakeholders in the
preparation of the Budget and consequently ensure that the national budget
reflects the views, aspirations and priorities of all stakeholders.
The budget process is undertaken at
the following four key levels:
i.
The Ministry of Finance, Planning and
Economic Development (MFPED),
ii.
Sector Working Groups, Line Ministries and
Local Governments,
iii.
Cabinet, and
iv.
Parliament.
According to the Budget Cycle, the
budget process starts in September each year and has six key stages, namely:
I.
Setting the macro-economic Framework
II.
Setting National Priorities and Sector
Ceilings
III.
Budget Consultations (Political and
Technical)
IV.
Preparation of the Budget Estimates
V.
Budget Implementation
VI.
Budget Monitoring and Evaluation.
3. THE BUDGET CONSULTATIVE PROCESS
Good Governance in the Budget Process
Our
budget process may be judged on the four pillars of good governance in public
sector management:
I.
Accountability – capacity to call public
officers to task for their actions
II.
Transparency – low cost access to relevant
information
III.
Predictability – laws and regulations that
are clear, know in advance, and uniformly and effectively enforced, and
IV.
Participation – general consensus, supply
reliable information and provide a reality check for Government actions.
4. THE BUDGET PREPARATION PROCESS
Budget
preparation is a very participatory process involving many stages and, many
stakeholders within and outside Government.
1. Determining the Resource Envelop
The
Directorate of Economic affairs within the Ministry is responsible for
determining the resources envelop in consultation with other Government
institutions such as URA and Bank of Uganda.
The
budget resource envelope for the medium term is derived from projected domestic
revenues (tax and non tax), plus external financing (grants and loans), plus
non – bank savings, minus monies required for debt servicing and domestic
arrears repayment and plus or minus non bank borrowings /savings. Fiscal policy must be consistent with
monetary policy projections/target on money supply growth, private sector
credit and foreign reserves which determine Government borrowing or
saving.
Domestic tax revenue is projected
basing on:
1) Past
trends,
2) Efficiency
gains,
3) Growth
in volumes of imports,
4) Profits
of corporations,
5) Elasticity
of tax heads,
6) Growth
in real monetary GDP, and
7) Changes
in prices.
2. Setting National Priorities and Sector
Ceilings
Once
the resource envelop has been determined, the broad allocations of Government
resources between sectors is then determined based on:
I.
Priorities which have a direct bearing on
poverty and growth;
II.
The party manifesto, and;
III.
Constraints faced during implementation.
The Sector Ceilings for Government of
Uganda (GOU) resources are set as follows:
1)
The current financial year is used as a
base;
2)
All one – off expenditures undertaken in
the previous year are deducted from the sector ceiling and made available for
reallocation to identified priorities;
3)
The projected additional resources over and
above the current year’s resource envelope are then allocated among the policy
priorities with the higher priority areas and commitments receiving the first
call on these resources.
This
then becomes the basis for the preparation of the indicative MTEF which details
the respective sector ceilings. These
indicative ceilings are given to the sectors in October under a Budget Call
Circular. These are revised in March
after the submission of Sector Budget Framework Paper (BFP), in May after
receiving comments from Parliament on the National BFP and finally in June just
before reading the budget.
3. Budget Consultations
a) Cabinet Retreat (October)
The
Budget process commences with a Cabinet Retreat held during the month of
October. The retreat provides an
opportunity for the Minister to present the Budget Strategy Paper that spells
out the major economic developments and re-casts Government priorities that
need to be addressed in the following year.
The
retreat is meant to guide on the following:
1) The
Budget Strategy and priorities for the following financial year;
2) The
Indicative Medium Term Fiscal Framework (MTFF) and Medium Term Expenditure
Framework (MTEF); and
3) Budget implementation issues for the current
financial year.
b) First Budget Call Circular (October)
Once
Cabinet has approved the Budget Strategy and Priorities, the agreed MTEF is
communicated to sectors in October through the First Budget Call Circular. The main objective of the Circular is to
communicate the budget strategy for the following financial year and request
Sectors to prepare and submit their Budget Framework Papers (BFP).
The
specific objectives of the Circular are to:
i.
Communicate the Budget Strategy, Priorities
and Indicative 5 year Medium Term Expenditure ceilings, the first year of which
is the basis for financial allocations of the expenditure estimates for the
next financial year;
ii.
Emphasize the policy and administrative
guidelines for the development of the budget for the coming financial year; and
iii.
Request the Sectors to prepare their Budget
Framework Papers, clearly linking sector ceilings to sector priorities and
their vote functions.
c) Local Government Workshops
(October/November)
The
Local Governments’ Budgets and Plans form an integral part of the National
Budget. A series of local government
consultative workshops are held to launch the preparation of the Local
Government Budget Framework Papers (LGBFPs).
The workshops which are facilitated by the Ministry together with
representatives from relevant sectors are attended by political leaders and
heads of departments from the local governments. The purpose of these workshops is to:
i.
Disseminate Government priorities for the
next financial year;
ii.
Disseminate the Indicative Planning figures
for Central Government transfers to local governments;
iii.
Identify and discuss policy issues which
affect the operations of local governments.
Each
District and Municipal Local Government prepares a Local Government Budget
Framework Paper (LGBFP). The LGBFPs are
guided by the long term Local Government Development Plans as well as any
emerging issues and priorities of the communities within the Local
Government. Different departments in
each Local Government contribute to the LGBPF, just as they do contribute to
the preparation of their budget estimates.
The consultations enable the development of a report which summarizes
the key issues that affect service delivery in the local governments. The consultations also are the basis for
preparation of LGBFPs, which all Local Governments submit to the Ministry of
Finance and inform the National Budget Framework Paper. Each District and Municipal Local Government
prepares a Local Government Budget Framework Paper (LGBFP).
d) First Budget Consultative Workshop
(October/November)
The
first Budget Consultative Workshop is held to officially launch the beginning
of the budget preparation process. The
key participants at this workshop include Cabinet Ministers, Members of
Parliament, technical officials from the Central Agencies, Local Government Officials,
Development Partners and Civil Society and Private Sector Organizations.
The specific objectives of the
Workshop are to:
i.
Communicate the economic outlook for the
country and the challenges encountered in budget execution.
ii.
Discuss the Budget Strategy and Priorities
in light of the poverty eradication targets.
iii.
Discuss the Medium term Expenditure
Framework; and
iv.
Disseminate the Budget Guidelines for the
preparation of the Budget for the following Financial Year.
e) Sector Working Group Consultations
(December)
Government
introduced the Sector – Wide Approach (SWAp) to planning in 1999/2000. Each sector is required to set – up a Sector
Working Group composed of key stakeholders to coordinate the planning
process. After the national budget
consultative meeting, each Sector Working Group organizes discussions with
spending agencies within the sector and agree on sector priorities ad the
financing required. Each Sector Working
Group is made up of representatives from all Ministries within the sector, the
Ministry of Finance, Planning and Economic Development, Departments and
Agencies within the sector, representatives from civil society and the private
sector, Local Government representatives of the development partners.
Sectors in 2008/2009 Financial Year
included:
i.
Accountability
ii.
Agriculture
iii.
Education
iv.
Energy and Mineral Development
v.
Health
vi.
Information and Technology
vii.
Justice Law and Order
viii.
Lands, Housing and Urban Development
ix.
Legislature
x.
Public Administration
xi.
Public Sector Management
xii.
Social Development
xiii.
Tourism, Trade and Industry
xiv.
Water and Environment
xv.
Works and Transport
xvi.
Security
An
example of the membership of a SWG is the Agriculture Sector. The SWG is composed of representatives from,
among others;
1)
Ministry of Agriculture, Animal Industry
and Fisheries
2)
Ministry of Finance, Planning and Economic
Development
3)
Ministry of Water and Environment
4)
National Agricultural Research Organization
(NARO)
5)
National Agricultural Advisory Services
(NAADS)
6)
Cotton Development Organization (CDO)
7)
Uganda Coffee Development Authority (UCDO)
8)
Uganda National Farmers’ federation (UNFF)
9)
CARE Uganda (NGO)
10)
Action Aid Uganda (NGO)
11)
Environment Alert (CSO)
12)
Agriculture Funding Donors
13)
Faculty of Agriculture, Makerere
University.
Each sector Budget Framework Paper
spells out the following for the financial year and the medium term:
I.
Sector Objectives
II.
Past performance and future plans,
including the outputs each Government institution intends to achieve with its
resources.
III.
Proposed expenditure allocations setting
out major expenditure areas, and highlighting major changes to resource
allocations and key funding priorities.
Key Challenges
As
part of the budget reforms, in 2008/2009, Output – Oriented Budgeting (OOB) was
introduced as a means of relating budget allocations to outputs. Sectors identified their core vote functions
and budgeted for them accordingly. Vote
functions also enable Government to show what spending institutions have done
with past expenditures, and what they intend to achieve with future budgetary
allocations. This is intended to enhance
both transparency in the allocations of funds, and accountability in the use of
scarce budgetary resources.
f) Inter – Ministerial Consultative
Meetings (February)
Inter
– ministerial consultative meetings take place between Sector Ministers and the
Minister. These meetings are held to
discuss sector budget priorities and allocations at the political level and to
resolve any outstanding policy issues.
g) Mid – term Expenditure Review (March)
The
main objective of the review is to assess the half budget performance with a
view of identifying areas that need corrective actions to enhance the
efficiency and effectiveness of delivery of public services. A workshop of key stakeholders is held to discuss
the half year budget performance report and agree on the way forward.
h) Consultation within East African
Community (May)
In
line with the programme for achieving deeper economic and political integration
in EAC, the National Budgets of Partner States are read on the same day by 15th
June. The Ministers of Finance hold
annual pre – budget and post budget consultations with the view to harmonize
tax policies, monetary and relevant fiscal affairs.
4. Preparation of the Budget Estimates
a) National Budget Framework Paper
According
to Section 4 (1) and (2) of the Budget Act 2001, the President shall cause to
be prepared and laid before Parliament, by 1st of April, a three
years macroeconomic plan and programmes for the economic and social
development, and indicative preliminary revenue and expenditure framework of
Government for the following financial year.
To fulfill this requirement, the Ministry prepares the National Budget
Framework Paper. This is consolidated
from the Sectors’ and Local Governments’ BFPs.
Specifically the BFP highlights:
I.
Government’s macroeconomic policies, recent
macroeconomic performance and future plans, and
II.
Government’s priorities and how resources
have been allocated to achieve the national objectives.
b) Background to the Budget
Each
year and prior to the Budget Speech, the Ministry of Finance, Planning and
Economic Development publishes the Background to the Budget (BTTB), which
presents both a retrospective context for the budget of the coming Fiscal
year. The BTTB provides background
information on the factors that influence key budgetary decisions during a
current financial year, together with a comprehensive report on the effects of
such decisions on the Ugandan economy and the Government’s quest to eradicate
poverty.
c) Budget Estimates (End of May)
The
procedure for preparation and consolidation of the Budget Estimates is as
follows:
I.
Votes receive ceilings from the Sector
Working group
II.
Votes set priorities derived from the
Sector Investment Plan
III.
Accounting officers set programmes
(departments) cost their activities based on the chart of accounts
IV.
The programme budgets are consolidated into
the Vote budget.
According
to Section 5 (1) of the Budget Act 2001, all spending agencies must submit
their Budget estimates for the following year by 15th February each
year.
5. Presentation and Approval of the
Budget
a) Cabinet Approval of National BFP (By
March 30th)
The
National BFP is the document in which Government specifies its policy stance
for the following year. The Minister
submits the draft Budget Framework Paper to Cabinet on the Government strategy
for the next financial year.
The
BFP spells out the major national priorities and how the resources have been
allocated to achieve the national objectives.
It incorporates the inputs of the consultative process and covers, among
others, sector inputs specifying sector priorities for the year, and in view of
the resource constraints, proposes the necessary trade – offs which Cabinet
endorses before the national Budget Framework Paper is submitted to Parliament.
b) Parliamentary Approval of National BFP
(By 15th May)
In
line with Section 4 (i) of the Budget Act 2001, The National BFP is submitted
to Parliament by 1st of April.
This is followed by discussions of the BFP by Sessional Committees of
Parliament which submit their reports to the Parliamentary Budget Committee by
the 25th of April. Between 1st
April and 25th April, there is a lot of consultation between the
different Committees of Parliament, spending agencies and the Ministry. When these consultations are complete,
Parliament consolidates their recommendations and submits them to His
Excellency the President by 1st of May for consideration.
c) Budgets of Statutory Bodies (By April
30)
In
line with Section 5 of the Budget Act 2001, Heads of Self Accounting Bodies are
required to submit their budget estimates of revenue and expenditure to the
Ministry on behalf of the President, during the budget preparation stage. These estimates are laid before Parliament by
the Minister during the presentation of the budget without any amendments.
d) Cabinet Approval of the Budget (Early
June)
The
Minister holds consultations with His Excellency the President in the process
of finalizing the Budget Speech. During
the consultations, the recommendations of the Parliament on the budget are
discussed and the President gives his input into the budget.
This
is followed by a final cabinet meeting at which the Minister presents the
budget proposals for the following Fiscal Year, the revenue measures and the
draft Budget Speech. Once discussed and
endorsed by Cabinet, the Budget Speech is ready for Presentation to Parliament.
e) Presentation of the Budget Speech (By
June 15)
The
Minister presents the Budget Speech at a seating of Parliament by the 15th
day of June in accordance with Article 155 (1) of the Constitution and the
Budget Act 2001. It is an agreed
practice that the Budgets of the five East African Community (EAC) countries
are read on the same day.
The
Budget Speech is presented to Parliament by the Minister of Finance on behalf
of His Excellency the President. The
Budget Speech articulates:
I.
Highlights of Economic and Fiscal
Performance in and the Outlook for Financial year.
II.
Emerging Trends in the domestic, regional
and international economy.
III.
Strategy for expanding Employment and
Growth Opportunities.
IV.
Proposed Taxation Measures and the way
forward.
The
presentation of the Budget Speech in Uganda is covered live by the electronic
media, signifying the fact that the budget belongs to all Ugandans. The Budget Speech is made available to the
print media who reproduce it in different languages and different news papers
across the country.
f)
Report
of loans and Grants (By June 15)
In
line with the Budget Act 2001 (13), the Minister on behalf of the President
presents to Parliament a report of the total indebtedness of the State in the
financial year showing the following:
i.
The total principle and sources of loans
ii.
The accumulated interest on each loan
iii.
The status of servicing and repayment of
each loan and debt
iv.
The utilization and performance of each
loan including the extent to which the objectives of the loan or debt have been
met.
g) Ministerial Policy Statements (By June
30)
In
line with Section 6 (1) of the Budget Act 2001 every Ministry is expected to
prepare and submit a Ministerial Policy Statement each financial year with
detailed information on the planned expenditure and outputs for the following
financial year to Parliament. The
Ministerial Policy Statements forms the basis for Parliament’s scrutiny and
debate of the budget of each Ministry and provides a link between the
Ministry’s strategic priorities and the proposed Budget allocations.
h) Vote on Account (By June 30)
In
line with Article 154 (4) of the Constitution, once the Budget Speech has been
read, the Ministry of Finance prepares the Vote on Account for Parliamentary
approval that allows public spending of up to one third of the budget before
the budget is approved by Parliament.
i)
Parliamentary
Sessional Committee Discussions (August 31)
The
Parliamentary Sessional Committees scrutinize the Ministerial Policy Statements
Vis a vis the proposed budget allocations and the National BFP. The Chairperson of each Committee presents a
report to the Plenary of Parliament.
j)
Approval
of Budget Estimates (By September 30)
Once
Parliament has concluded debate on the budget and their concerns incorporated,
the Minister thereafter seeks the appropriation and approval of the Budget
Estimates through the Appropriation Bill.
The Parliamentary Budget Committee scrutinizes the Bill and presents a
report to the Plenary of Parliament for discussion. The Bill must be passed into law by 30th
September as per the Budget Act.
6. The Local Government Budget Process
A
Local Government budget is the detailed costed plan of how a local government
plans to allocate and utilize available resources in line with its objectives,
needs and priorities. Local Governments
have discretionary planning and budgeting powers, but their plans and budgets
need to national priorities and policies.
Consequently the local government budget cycle has to fit into the
national budgeting cycle, and starts in October and ends in June.
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