What does the Amendments to the Public Finance Management Bill of 2015 intially mean “Government of Uganda not needing approval for short-term loans”
Today there are planned voting for the Public Finance Management (Amendment) Bill of 2015. This is confirmed through the Minister of Finance, Planning and Economic Development Hon. Matia Kasaija. I will first quote the bill itself then comment on the matter at hand.
“An Act to amend the Public Finance Management Act, 2015; to provide for the preparation of Budget Framework Papers by Sector; to repeal the provision on the requirement to represent a certificate certifying that the policy statements of the votes are gender and equity responsive; to provide for virement by a vote of not more then ten percent of the budget of the vote; to provide for further financing of supplementary estimates; and to provide for guarantees and advances by the Bank of Uganda” (P3, 2015, PFMA).
Amendment of Section 13:
“The Minister or another person responsible for the vote, as any case may be, shall base on the priorities identified in the Budget Framework Paper of the sector of the vote, cause to be prepared for the vote, a policy statement for the vote, for the proceeding financial year and shall submit the policy statement to the Parliament by the 15th of March” (P4, 2015, PFMA).
Amendment of Section 17:
“A vote that does not expend money that was appropriated to the vote for the financial year shall by the 31st July of the following financial year, repay the money to the Consolidated Fund, except where the Secretary to the Treasury authorized the vote to retain money” (P4, 2015, PFMA).
“The authority given by the Secretary to the Treasury under subsection (2) shall be valid up to 31st of October of the financial year” (P4, 2015, PFMA).
Amendment of Section 20:
“The functions of a vote may be transferred to another vote or a vote may be assigned additional functions” (P4, 2015, PFMA).
“Where the functions of a vote are transferred to another vote or where a vote is assigned additional functions, the functions of the vote shall be financed accordance with sections 25” (P4, 2015, PFMA).
Amendment of Section 25:
“(4a) Where the funds in the Contingencies Fund are not sufficient to finance the supplementary budget, the supplementary budget shall be financed by a reallocation of the funds of the annual budget” (P5, 2015, PFMA).
Amendment of Section 36:
“(5a) In addition to subsection (5), a loan raised by the Government as a temporary advance by the Bank of Uganda, which does not extend beyond a financial year shall not require to be approved by the Parliament” (P5, 2015, PFMA).
Amendment of Section 82:
“(1) The bank may with the approval of Parliament, make temporary advances to the Government and local governments in respect of temporary deficiencies of recurrent revenue” (P:6, 2015, PFMA).
“(1a) Notwithstanding subsection (1) the bank may take a temporary advance to the Government, without approval of the Parliament, where the advance does not extend beyond a financial year” (P:6, 2015, PFMA).
“(5) The bank shall not guarantee a payment to any person on behalf of Government or make any advance to any person on behalf on of Government without the prior approval of Parliament” (P:6, 2015, PFMA).
It is reasonable that you have dates for the Budget Framework for the next financial year as they are switching dates in the new amendment. From the 15th of March until the set date of the 31st of July, also by the end of the year pay the money that was voted for into the Consolidated Fund with an exception that the Treasury Secretary has a vote to retain that money. The first changes to the law aren’t really scary or worrying it’s the parts that I come to now seems scary!
In Section 36 the government will have the ability to take up loans without having vote by the Parliament. The Government can henceforth take up advances without being questioned as long as it is set into a certain timeframe. When this continues into the Section 82 where the Government doesn’t need a stamp of approval from the Parliament to take Advances from the Bank of Uganda to secure funding where there is “deficiencies of recurrent revenue”, which means that if a sector of Government is lacking money. They can go directly to the bank and extract funding without having approval from the Parliament. This is to secure balance of funds and to stop the deficiencies in the Government. Still it’s a worrying that the Government can get this ability. (1a) under the same sections is giving the same kind of advance within a financial year without an approval of the Parliament. While the last Section (5) is telling the bank can’t guarantee a payment to any person without approval of the Parliament to a person which represent or are a part of the Government. So With this means that a person or affiliated to the Government can get an advance or loan from the Bank of Uganda without approval of the Parliament, but still not allowed to get a direct payment form the Bank of Uganda. You do get that right? Some of it is if there is a deficiency in the Government. Are there so often missing funds now that the Government has to act in this way, because the lack of funds is so big now that they don’t want approval of the Parliament to fix their own deficiencies? And does the Government fear that giving the information and stamp of validation from the Parliament will show the current loans and advances that the Government does for the moment or need?
The Government must be needing loans towards the election of 2016. That must be reason why the Amendment is happening now and the deficiency is happing now. Also why should it be so hard to get the approval and show the country what the advances and loans are going to during the Financial Year! This is just proving what state of affairs has turned in the country and why people should address it. That this kind of laws get into effect shows how little oversight the Government wants to show and secondly shows how the Government want to loan money without proving paperwork for where the money is going. Since its still short time loans that is to withstand a Financial Year still that this is not looking good, should be visible. The Public Financial Management Amendment of 2015 is surely made to make life easier for the Government and not have to question their actions through the Parliament when it comes to short-term loans and advances. Something is surely up. And we’ll see over time how fruitful this will be and I wouldn’t be surprised if the inflation starts to rise after this amendment to the law get into effect. Peace.