Reject amendments to the Uganda Public Finance Management Act 2015
The Issue
SYNOPSIS OF IMPLICATIONS OF PFM Act AMENDMENT BILL 2015
Introduction
The Minister of Finance Planning and Economic Development presented to Parliament the Public Finance Management Amendment Bill 2015. Clauses have been presented and analyzed here under.
Section 9 of the PFMA[1], in this act referred to as the Principal Act is amended- a) by substituting for “accounting officer” in subsection (1) and with “Sector “and (b) by substituting for ‘vote ‘in subsection (1) with sector.
Implication
We observe that the law was hailed from the onset to have been very good in as far as holding public officers to account. By choosing to replace accounting officers with sector, it becomes difficult for the public to hold public officers accountable for failure to execute this function due to the absence of the “legal person” in the clause.
Position
We strongly recommend that section 9 be preserved for the purposes of maintaining a strong mechanism for holding accounting officers accountable.
Section 13[2] of the Principal Act, is amended- (a) by substituting for section 13 the following: the Minister or any other person responsible for the vote as the case may be shall base on the priorities identified in the budget frame work 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 parliament for by the 15th of March and b) by repealing subsection (15) (g).
Implications
The proposed amendment in a) tags policy statement to priorities identified in the budget framework paper .This is ordinarily what should be the case and as such this amendment does not change and the gap identified can be administratively handled but also clarified in the regulations.
By repealing subsection (15) (g) means that the coveted certificate of gender and equity responsiveness is to be deleted from the law.
Position
The amendment proposed in a) can be addressed administratively through a budget call circular or by the regulations.
Certificate for Gender and Equity responsiveness is very critical if the country is to attain balanced development. The current section in the law was a compromise position and such government needs time to test this process. Section 13 (15) (g) should be protected.
Section 17[3] of the Principal Act is amended as follows a) by substituting subsection 2 the following 2’) the vote does not expend money that was appropriated to the vote for the financial year shall by the end of 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 the money)by substituting subsection 3 the following; 3) the authority given by the secretary to the treasury under subsection 2 shall be valid up to 31st October of the financial year.
Implications
The proposed amendments open up the gap that was closed in section 17(2) which gives parliament powers to appropriate all funds to be used in any financial year and therefore giving such powers to the secretary to the treasury undermines the power of Parliament and may encourage misuse of public funds.
Position
The section should be maintained as is.
Amendment of Section 20[4] of the Principal Act- Section 20 of the Principal Act is substituted for with the following; 1) the functions of the vote may be transferred to another vote or a vote may be assigned additional functions, 2) where a vote is transferred to another vote or where a vote is assigned additional functions the functions of the vote shall be financed in accordance with section 25.
Implications
By having these amendments passed into law is creating another ground for supplementary budgets. Changing the vote or giving it additional functions is a matter that is foreseeable and as such this can be accommodated in the normal budget approve process and need not be subjected to section 25.
Position
The current section 20 should be maintained.
Section 22[5] of the Principal Act is amended a) by substituting “Minister in subsection 1 with secretary to the treasury b) by substituting sub section (2) the following:- a) more than ten percent of the budget of the vote.
Implications
The move to replace the Minister with Secretary to the Treasury is okay because the functions envisaged are rather technical however widening the scope of a virement from 10% of the activity is to maximum 10% of the vote is a gross deviation and may perpetuate financial indiscipline. This is so because 10 % deviation from the approved spending plans has potential to distort expenditure plan for the whole sector.
Position
Save for the change from Minister to Secretary to the treasury the section needs to be sustained.
Section 25[6] of the Principal Act is amended a) by substituting ‘through a supplementary appropriation bill appearing at the end of subsection with ‘ within four months after the money is spent) by repealing subsection 2 and c) by inserting immediately after subsection 4 the following 4a) where the funds in the contingency funds are not sufficient to finance the supplementary budget, the supplementary budget shall be financed by a re allocation of funds of the annual budget.
Implications
The current section subjects supplementary requests to be laid before parliament for approval and yet the bill seeks to allow government to spend money and seek approval later. This is bad practice and perpetuates abuse especially during the elections where appetite to spend is high.
The current law subjects supplementary budget to the contingency fund. The Government should set up a realistic amount of money in the contingency fund and for FY 2015/16 Government neglected or failed to provide money for this. These amendments seem to be seeking to make supplementary budget requests circumvent the requirements of the contingency fund .This makes the contingency fund redundant.
Position
Amendments for section 25 should be rejected as they are retrogressive to prudent public Finance management.
Section 36[7] of the Principal Act is amended by inserting immediately after subsection (5) the following:-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 shall not require to be approved by Parliament.
Implications
The move and this clause undermines the role of Parliament to approve all loans
Position
This section needs to be protected.
Section 82[8] of the Principal Act is amended by substituting for subsection 1) b) the following b)in section 33-i)by substituting for subsection 1 the following -1)the bank may with approval of parliament make temporary advances to government and local governments in respect to temporally deficiencies of the recurrent revenue.ii)by inserting immediately after subsection 1 the following 1a) not withstanding subsection1,the bank may make a temporary advance to the government without approval o parliament where the advance doesn’t not extend beyond a financial year.iii) by inserting immediately after subsection 4 the following 5)the bank shall not guarantee payment to any person on behalf of government or make any advance to any person on behalf of government without prior approval of parliament.
Implications
The move and this clause undermine the role of Parliament to approve all loans but allow Bank of Uganda to print money for fiscal use which is an undesirable PFM move.
Position
This section needs to be protected.
Conclusion
We strongly feel that it is not in good faith for government to propose these changes hardly six months when the law is on operation. We believe that the substantive issues here within can be addressed by the regulations to the PFM Act 2015, which are still being drafted and discussed.
Petition Closed
The Issue
SYNOPSIS OF IMPLICATIONS OF PFM Act AMENDMENT BILL 2015
Introduction
The Minister of Finance Planning and Economic Development presented to Parliament the Public Finance Management Amendment Bill 2015. Clauses have been presented and analyzed here under.
Section 9 of the PFMA[1], in this act referred to as the Principal Act is amended- a) by substituting for “accounting officer” in subsection (1) and with “Sector “and (b) by substituting for ‘vote ‘in subsection (1) with sector.
Implication
We observe that the law was hailed from the onset to have been very good in as far as holding public officers to account. By choosing to replace accounting officers with sector, it becomes difficult for the public to hold public officers accountable for failure to execute this function due to the absence of the “legal person” in the clause.
Position
We strongly recommend that section 9 be preserved for the purposes of maintaining a strong mechanism for holding accounting officers accountable.
Section 13[2] of the Principal Act, is amended- (a) by substituting for section 13 the following: the Minister or any other person responsible for the vote as the case may be shall base on the priorities identified in the budget frame work 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 parliament for by the 15th of March and b) by repealing subsection (15) (g).
Implications
The proposed amendment in a) tags policy statement to priorities identified in the budget framework paper .This is ordinarily what should be the case and as such this amendment does not change and the gap identified can be administratively handled but also clarified in the regulations.
By repealing subsection (15) (g) means that the coveted certificate of gender and equity responsiveness is to be deleted from the law.
Position
The amendment proposed in a) can be addressed administratively through a budget call circular or by the regulations.
Certificate for Gender and Equity responsiveness is very critical if the country is to attain balanced development. The current section in the law was a compromise position and such government needs time to test this process. Section 13 (15) (g) should be protected.
Section 17[3] of the Principal Act is amended as follows a) by substituting subsection 2 the following 2’) the vote does not expend money that was appropriated to the vote for the financial year shall by the end of 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 the money)by substituting subsection 3 the following; 3) the authority given by the secretary to the treasury under subsection 2 shall be valid up to 31st October of the financial year.
Implications
The proposed amendments open up the gap that was closed in section 17(2) which gives parliament powers to appropriate all funds to be used in any financial year and therefore giving such powers to the secretary to the treasury undermines the power of Parliament and may encourage misuse of public funds.
Position
The section should be maintained as is.
Amendment of Section 20[4] of the Principal Act- Section 20 of the Principal Act is substituted for with the following; 1) the functions of the vote may be transferred to another vote or a vote may be assigned additional functions, 2) where a vote is transferred to another vote or where a vote is assigned additional functions the functions of the vote shall be financed in accordance with section 25.
Implications
By having these amendments passed into law is creating another ground for supplementary budgets. Changing the vote or giving it additional functions is a matter that is foreseeable and as such this can be accommodated in the normal budget approve process and need not be subjected to section 25.
Position
The current section 20 should be maintained.
Section 22[5] of the Principal Act is amended a) by substituting “Minister in subsection 1 with secretary to the treasury b) by substituting sub section (2) the following:- a) more than ten percent of the budget of the vote.
Implications
The move to replace the Minister with Secretary to the Treasury is okay because the functions envisaged are rather technical however widening the scope of a virement from 10% of the activity is to maximum 10% of the vote is a gross deviation and may perpetuate financial indiscipline. This is so because 10 % deviation from the approved spending plans has potential to distort expenditure plan for the whole sector.
Position
Save for the change from Minister to Secretary to the treasury the section needs to be sustained.
Section 25[6] of the Principal Act is amended a) by substituting ‘through a supplementary appropriation bill appearing at the end of subsection with ‘ within four months after the money is spent) by repealing subsection 2 and c) by inserting immediately after subsection 4 the following 4a) where the funds in the contingency funds are not sufficient to finance the supplementary budget, the supplementary budget shall be financed by a re allocation of funds of the annual budget.
Implications
The current section subjects supplementary requests to be laid before parliament for approval and yet the bill seeks to allow government to spend money and seek approval later. This is bad practice and perpetuates abuse especially during the elections where appetite to spend is high.
The current law subjects supplementary budget to the contingency fund. The Government should set up a realistic amount of money in the contingency fund and for FY 2015/16 Government neglected or failed to provide money for this. These amendments seem to be seeking to make supplementary budget requests circumvent the requirements of the contingency fund .This makes the contingency fund redundant.
Position
Amendments for section 25 should be rejected as they are retrogressive to prudent public Finance management.
Section 36[7] of the Principal Act is amended by inserting immediately after subsection (5) the following:-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 shall not require to be approved by Parliament.
Implications
The move and this clause undermines the role of Parliament to approve all loans
Position
This section needs to be protected.
Section 82[8] of the Principal Act is amended by substituting for subsection 1) b) the following b)in section 33-i)by substituting for subsection 1 the following -1)the bank may with approval of parliament make temporary advances to government and local governments in respect to temporally deficiencies of the recurrent revenue.ii)by inserting immediately after subsection 1 the following 1a) not withstanding subsection1,the bank may make a temporary advance to the government without approval o parliament where the advance doesn’t not extend beyond a financial year.iii) by inserting immediately after subsection 4 the following 5)the bank shall not guarantee payment to any person on behalf of government or make any advance to any person on behalf of government without prior approval of parliament.
Implications
The move and this clause undermine the role of Parliament to approve all loans but allow Bank of Uganda to print money for fiscal use which is an undesirable PFM move.
Position
This section needs to be protected.
Conclusion
We strongly feel that it is not in good faith for government to propose these changes hardly six months when the law is on operation. We believe that the substantive issues here within can be addressed by the regulations to the PFM Act 2015, which are still being drafted and discussed.
The Decision Makers
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Petition created on October 12, 2015