A CALL TO PARLIAMENT OF UGANDA TO REJECT INAPPROPRIATE AMENDMENTS IN THE PFMA, 2015”
The Issue
On 30th September 2015, the Minister of Finance, Planning and Economic Development tabled amendments to the Public Finance Management Act, 2015. This was rather an unprecedented move that has shocked many citizens given that it is barely six months since this law was assented to by H.E the President of Uganda. In its current form, the Public Finance Management Act, 2015, provides strong checks and balances against Government expenditure and debt financing; allows for enhanced Parliamentary oversight over GOU fiscal management as well as conformity of sector budgets to gender and equity budget guidelines developed by Government.
While CSOs and citizens agree that amendments to laws are necessary; where appropriate; the members convened here disagree with the largely unsuitable tabled amendments. The amendments seek to make changes to 8 sections of the Principal Act.
Our fears on the proposed amendments
Under Section 9 of the PFMA 2015 that provides for preparation and submission of the sector Budget Framework Paper to Parliament, Government is proposing to substitute the word “Accounting Officer” with “Sector‟ it further seeks to substitute “vote‟ with “sector‟.
The major concern here is that by choosing to replace “Accounting Officer‟ with “Sector‟, it absolves the Accounting Officer of any responsibility in financial mismanagement of public finances. CSOs believe that this will encourage corruption with impunity.
Our other concern is the Killer proposal to repeal the Certificate of Gender and Equity under Section 13, subsection (15) (g) of the Principal Act. This is a disappointment given that Uganda was the first country in world to have a gender clause embedded in the public finance management laws. The proposal to tag the policy statement to priorities identified in the National Budget Framework Paper (NBFP) does not require repeal of the whole section, but rather a clarification in the PFM regulations. Eliminating this clause will greatly affect Government current strides in ensuring gender equality and empowerment of marginalized groups especially as the country seeks to implement the Sustainable Development Goals.
The amendments also seek to allow a Vote to retain funds up to 31st October of the following financial year following authorization from the Permanent Secretary. This contravenes Section 17 of the Public Finance Management Act that requires all votes to return all unutilized funds by 31st July of the following financial year. According to the Auditor General’s report for FY 2013/14; UGX.9, 412,704,745 was returned to the Consolidated Fund and projects returned UGX.217, 393,823,773. Members present believe that increasing this grace period will encourage laxity among Accounting Officers in processing payments, procuring goods and services and consequently delays in service delivery.
While CSOs agree with the move to substitute Minister with Secretary to the Treasury in allocating a virement of not less than 10% in the amendment of Section 22 of the PFMA; we are against the proposal to widen the scope of a virement to more than 10% of the vote as this will increase the likelihood of distortion of the sector expenditure and provides room for continued financial indiscipline.
Section 25 causes a relapse into the past where if the funds for the supplementary budget exceed those provided for in the Contingencies Fund, then Government may obtain funds from the national budget. In the current law, it is required that Government allocates a realistic reserve in the Contingencies Fund to cater for this. The proposed amendment therefore allows for destabilization of the economy through reallocation of already planned funds to cater for the supplementary budget; therefore rendering the Contingency Fund unnecessary.
In addition, the current law requires the Minister to lay before Parliament the supplementary budget for approval, before it can be expended. However the bill seeks to make a provision for Government to seek approval within 4 months after the money is spent; thus providing leeway for Parliamentary approval after expenditure of the funds. This proposal is unacceptable as it perpetuates unnecessary fiscal expenditure especially during the elections where appetite to spend is high.
Amendment to Section 36 proposes that Government can acquire any loan that does not extend beyond a financial year without Parliament approval. Further still, a loan raised by government as a temporary advance by the bank of Uganda which does not extend beyond a financial shall not necessitate approval by Parliament. The proposal to alter Section 36 will only serve to undermine the role of Parliament in approving all loans as provided for in Constitution of Uganda; and provide no oversight for maintaining the public debt that is currently at USD 7,534.1m as at end June 2014 according to the Medium Term Debt Management Strategy (MTDS) FY 2015/16 – 2019/20.
Citizens also note with concern the proposal contained in the Amendment of Section 82 of the PFMA that grants Bank of Uganda power to make temporary advances to government and local governments in respect to temporary shortages of the recurrent revenue, without approval of Parliament. This proposal not only undermines the role of Parliament to approve all loans; but allows Bank of Uganda discretion to print money for fiscal use which only results in increasing inflation and a poor macroeconomic environment as is already being witnessed today. This is like giving Government of Uganda a blank cheque without any checks and balances.
In light of all these amendments, CSOs declare that the proposed amendments are now contrary to keeping prudent finance management principles and urge Parliament to consider the following recommendations:
I. Stay the amendment to repeal the Certificate of Gender and Equity (CGE) under Section 13, Subsection 15 which requires that every sector submits work plans and budgets that are gender responsive. If the Ministry of Finance has no capacity to issue CGE, then the sole responsibility should be given to the Equal Opportunities Commission (EOC) which was originally proposed by Civil Society.
II. We strongly recommend that Accounting Officers must remain accountable under Section 9 to maintain responsibility for developing the Budget Framework Papers for their institutions and therefore financial management of their institutions; rather than leaving it to the sector.
III. Furthermore, CSOs call for rejection of the proposal that allows the Bank of Uganda to print money to fill any void in recurrent revenue; unless deemed unnecessary and only following Parliamentary approval. It also urges Parliament to reject the proposal that seeks to undermine its powers of approval of all public debt to ensure debt sustainability.
IV. Citizens continue to call for maintaining of the Section 17 that requires accounting officers to return funds to the Consolidated Fund by 31st July of the following financial year.
V. Maintenance of Section 20 where only Parliament shall provide approval for the Minister to reallocate funds from a vote to another vote in case of transfer of functions between votes.
VI. Only 10% be allowed for the Secretary to the Treasury to vary within the total vote allocation as originally stipulated in Section 22, subsection 2 to ensure financial discipline.
VII. Amendments for section 25 on supplementary budgeting should be rejected as they are a threat to prudent public Finance management.
VIII. Section 36 must be maintained in its entirety where the loan raised by the Minister must be laid before Parliament and the loan shall only be enforceable upon Parliament approval, by a resolution.
CSOs hereby call Ugandan citizens to actively lobby their area MPs to reject these proposals and maintain the PFM Act, 2015 in its entirety. Citizens and CSOs gathered here therefore urge Members of Parliament to reject these proposals to preserve the integrity of the Act to ensure prudent financial management practices, debt sustainability and effective Parliamentary oversight over public resources. We also emphasize the importance of maintaining the CGE to serve the needs of all Ugandans; particularly the vulnerable persons including youth and women for gender responsive development.
We the undersigned make this appeal to Members of the 9th Parliament:
OUR TEAM
The Civil Society Budget Advocacy Group (CSBAG) since its launch in 2004 has made major leaps towards ensuring that the Ugandan budget making process is more participatory, transparent and citizens’ concerns are prioritized in government budget allocations and implementation. Our membership is comprised of the following 75 institutions:
Action Aid International Uganda | (AA - IU)
Website: www.actionaid.org/Uganda
ABICWA
District: Abim
African Centre for Trade and Development (ACTADE)
Website: www.actade.org
African Centre for Treatment and Rehabilitation of Torture Victims (ACTV)
Website: www.actvuganda.org
Advance Afrika
Advocates Coalition for Development and Environment (ACODE)
Website: www.acode-u.org
Anti-Corruption Coalition Uganda (ACCU)
Agago NGO Forum
District: Agago
Action Group for Health Human Rights and HIV/AIDS (AGHA)
Website: www.agha.or.ug
African Youth Development Link (AYDL)
Website: www.aydl.org
African Women's Economic Policy Network (AWEPON)
Website: www.awepon.net
Ashay Razyn foundation limited
Web: www.arfuganda.org
Awotid – Uganda
District: Abim
Caritas Kampala
Website: www.caritaskampala.org
Center for African Policy
Website:
Center for Domestic Violence (CEDOVIP)
Website www.preventgbvafrica.org
Center for Governance, Peace and Security
Website: www.gasuganda.com
Center for Policy Research and Development Initiatives
Website: www.cepordi.org
Centre for Women in Governance (CEWIGO)
Website: www.cewigo.org
Community Restoration Imitative Project
Website:
Development Network of Indigenous Voluntary Associations (DENIVA)
Website: www.deniva.or.ug
Development Research and Training (DRT)
Website: www.drt-ug.org
Development Watch (DEMWatch)
Deutsche Stiftung Weltbevölkerung- Uganda
Website: www.dsw-online.org
Eastern and Southern Africa Small Scale Farmers Forum (ESAFF- Uganda)
Website: www.esaff.org
Environmental Alert (EA)
Website: www.envalert.org
Food Rights Alliance (FRA)
Web: www.fra.ug
Forum for Women in Democracy (FOWODE)
Website: (www.fowode.org)
Forum for Kalongo Parish Women Association
District: Agago
FOWODE Young Leaders Alumni Association (FYLAA)
Website: www.fylaa.org
Hope after Rape
Website: www.har.interconnection.org
Hunger Fighters Uganda
Website: www.hungerfightersuganda.org
Human Rights Network Uganda (HURINET- U)
Website: www.hurinet.or.ug
Initiative for Social and Economic Rights - Uganda
Website: www.iser-uganda.org
Institute of social transformation (IST)
Website: www.ist-tft.org
Innovations for poverty action (IPA)
website: www.poverty-action.org
Isis-WICCE
Website: www.isis.or.ug
Integrated Disabled Women Activities (IDIWA)
Website: www.idiwa.org
Jenga Afrika
Website: www.jengaafrika.org
Kiyita Family Alliance for Development (KIFAD)
Website: www.kifad.org
Muti Community Based Development Initiative
District: Abim
National Association of Women Organisations in Uganda (NAWOU)
Website: www.nawouganda.org
National Forum for People Living with HIV/AIDS Network in Uganda (NAFOPHANU)
Website: www.nafophanu.org
National Union of Women with Disabilities of Uganda (NUWODU)
National Union of Disabled Persons Uganda (NUDIPU)
Website: www.nudipu.org
Nen Anyim Community Based Group
District: Agago
Participatory Ecological Land Use Management (PELUM)
Website: www.pelumuganda.org
Patongo Counseling Community Outreach
District: Agago
Passion for community development organization
District: Agago
People Living with HIV/AIDS Network
District: Abim
Platform for Citizen Participation and Accountability (PLACA)
Website: www.placaug.org
Regional Associates for Community Initiatives (RACI)
Website: www.raciug.org
Rwenzori Consortium for Civil competence (RWECO)
Website: www.rweco.org Spinal Injuries Association- Uganda
District: Kampala
Petition Closed
The Issue
On 30th September 2015, the Minister of Finance, Planning and Economic Development tabled amendments to the Public Finance Management Act, 2015. This was rather an unprecedented move that has shocked many citizens given that it is barely six months since this law was assented to by H.E the President of Uganda. In its current form, the Public Finance Management Act, 2015, provides strong checks and balances against Government expenditure and debt financing; allows for enhanced Parliamentary oversight over GOU fiscal management as well as conformity of sector budgets to gender and equity budget guidelines developed by Government.
While CSOs and citizens agree that amendments to laws are necessary; where appropriate; the members convened here disagree with the largely unsuitable tabled amendments. The amendments seek to make changes to 8 sections of the Principal Act.
Our fears on the proposed amendments
Under Section 9 of the PFMA 2015 that provides for preparation and submission of the sector Budget Framework Paper to Parliament, Government is proposing to substitute the word “Accounting Officer” with “Sector‟ it further seeks to substitute “vote‟ with “sector‟.
The major concern here is that by choosing to replace “Accounting Officer‟ with “Sector‟, it absolves the Accounting Officer of any responsibility in financial mismanagement of public finances. CSOs believe that this will encourage corruption with impunity.
Our other concern is the Killer proposal to repeal the Certificate of Gender and Equity under Section 13, subsection (15) (g) of the Principal Act. This is a disappointment given that Uganda was the first country in world to have a gender clause embedded in the public finance management laws. The proposal to tag the policy statement to priorities identified in the National Budget Framework Paper (NBFP) does not require repeal of the whole section, but rather a clarification in the PFM regulations. Eliminating this clause will greatly affect Government current strides in ensuring gender equality and empowerment of marginalized groups especially as the country seeks to implement the Sustainable Development Goals.
The amendments also seek to allow a Vote to retain funds up to 31st October of the following financial year following authorization from the Permanent Secretary. This contravenes Section 17 of the Public Finance Management Act that requires all votes to return all unutilized funds by 31st July of the following financial year. According to the Auditor General’s report for FY 2013/14; UGX.9, 412,704,745 was returned to the Consolidated Fund and projects returned UGX.217, 393,823,773. Members present believe that increasing this grace period will encourage laxity among Accounting Officers in processing payments, procuring goods and services and consequently delays in service delivery.
While CSOs agree with the move to substitute Minister with Secretary to the Treasury in allocating a virement of not less than 10% in the amendment of Section 22 of the PFMA; we are against the proposal to widen the scope of a virement to more than 10% of the vote as this will increase the likelihood of distortion of the sector expenditure and provides room for continued financial indiscipline.
Section 25 causes a relapse into the past where if the funds for the supplementary budget exceed those provided for in the Contingencies Fund, then Government may obtain funds from the national budget. In the current law, it is required that Government allocates a realistic reserve in the Contingencies Fund to cater for this. The proposed amendment therefore allows for destabilization of the economy through reallocation of already planned funds to cater for the supplementary budget; therefore rendering the Contingency Fund unnecessary.
In addition, the current law requires the Minister to lay before Parliament the supplementary budget for approval, before it can be expended. However the bill seeks to make a provision for Government to seek approval within 4 months after the money is spent; thus providing leeway for Parliamentary approval after expenditure of the funds. This proposal is unacceptable as it perpetuates unnecessary fiscal expenditure especially during the elections where appetite to spend is high.
Amendment to Section 36 proposes that Government can acquire any loan that does not extend beyond a financial year without Parliament approval. Further still, a loan raised by government as a temporary advance by the bank of Uganda which does not extend beyond a financial shall not necessitate approval by Parliament. The proposal to alter Section 36 will only serve to undermine the role of Parliament in approving all loans as provided for in Constitution of Uganda; and provide no oversight for maintaining the public debt that is currently at USD 7,534.1m as at end June 2014 according to the Medium Term Debt Management Strategy (MTDS) FY 2015/16 – 2019/20.
Citizens also note with concern the proposal contained in the Amendment of Section 82 of the PFMA that grants Bank of Uganda power to make temporary advances to government and local governments in respect to temporary shortages of the recurrent revenue, without approval of Parliament. This proposal not only undermines the role of Parliament to approve all loans; but allows Bank of Uganda discretion to print money for fiscal use which only results in increasing inflation and a poor macroeconomic environment as is already being witnessed today. This is like giving Government of Uganda a blank cheque without any checks and balances.
In light of all these amendments, CSOs declare that the proposed amendments are now contrary to keeping prudent finance management principles and urge Parliament to consider the following recommendations:
I. Stay the amendment to repeal the Certificate of Gender and Equity (CGE) under Section 13, Subsection 15 which requires that every sector submits work plans and budgets that are gender responsive. If the Ministry of Finance has no capacity to issue CGE, then the sole responsibility should be given to the Equal Opportunities Commission (EOC) which was originally proposed by Civil Society.
II. We strongly recommend that Accounting Officers must remain accountable under Section 9 to maintain responsibility for developing the Budget Framework Papers for their institutions and therefore financial management of their institutions; rather than leaving it to the sector.
III. Furthermore, CSOs call for rejection of the proposal that allows the Bank of Uganda to print money to fill any void in recurrent revenue; unless deemed unnecessary and only following Parliamentary approval. It also urges Parliament to reject the proposal that seeks to undermine its powers of approval of all public debt to ensure debt sustainability.
IV. Citizens continue to call for maintaining of the Section 17 that requires accounting officers to return funds to the Consolidated Fund by 31st July of the following financial year.
V. Maintenance of Section 20 where only Parliament shall provide approval for the Minister to reallocate funds from a vote to another vote in case of transfer of functions between votes.
VI. Only 10% be allowed for the Secretary to the Treasury to vary within the total vote allocation as originally stipulated in Section 22, subsection 2 to ensure financial discipline.
VII. Amendments for section 25 on supplementary budgeting should be rejected as they are a threat to prudent public Finance management.
VIII. Section 36 must be maintained in its entirety where the loan raised by the Minister must be laid before Parliament and the loan shall only be enforceable upon Parliament approval, by a resolution.
CSOs hereby call Ugandan citizens to actively lobby their area MPs to reject these proposals and maintain the PFM Act, 2015 in its entirety. Citizens and CSOs gathered here therefore urge Members of Parliament to reject these proposals to preserve the integrity of the Act to ensure prudent financial management practices, debt sustainability and effective Parliamentary oversight over public resources. We also emphasize the importance of maintaining the CGE to serve the needs of all Ugandans; particularly the vulnerable persons including youth and women for gender responsive development.
We the undersigned make this appeal to Members of the 9th Parliament:
OUR TEAM
The Civil Society Budget Advocacy Group (CSBAG) since its launch in 2004 has made major leaps towards ensuring that the Ugandan budget making process is more participatory, transparent and citizens’ concerns are prioritized in government budget allocations and implementation. Our membership is comprised of the following 75 institutions:
Action Aid International Uganda | (AA - IU)
Website: www.actionaid.org/Uganda
ABICWA
District: Abim
African Centre for Trade and Development (ACTADE)
Website: www.actade.org
African Centre for Treatment and Rehabilitation of Torture Victims (ACTV)
Website: www.actvuganda.org
Advance Afrika
Advocates Coalition for Development and Environment (ACODE)
Website: www.acode-u.org
Anti-Corruption Coalition Uganda (ACCU)
Agago NGO Forum
District: Agago
Action Group for Health Human Rights and HIV/AIDS (AGHA)
Website: www.agha.or.ug
African Youth Development Link (AYDL)
Website: www.aydl.org
African Women's Economic Policy Network (AWEPON)
Website: www.awepon.net
Ashay Razyn foundation limited
Web: www.arfuganda.org
Awotid – Uganda
District: Abim
Caritas Kampala
Website: www.caritaskampala.org
Center for African Policy
Website:
Center for Domestic Violence (CEDOVIP)
Website www.preventgbvafrica.org
Center for Governance, Peace and Security
Website: www.gasuganda.com
Center for Policy Research and Development Initiatives
Website: www.cepordi.org
Centre for Women in Governance (CEWIGO)
Website: www.cewigo.org
Community Restoration Imitative Project
Website:
Development Network of Indigenous Voluntary Associations (DENIVA)
Website: www.deniva.or.ug
Development Research and Training (DRT)
Website: www.drt-ug.org
Development Watch (DEMWatch)
Deutsche Stiftung Weltbevölkerung- Uganda
Website: www.dsw-online.org
Eastern and Southern Africa Small Scale Farmers Forum (ESAFF- Uganda)
Website: www.esaff.org
Environmental Alert (EA)
Website: www.envalert.org
Food Rights Alliance (FRA)
Web: www.fra.ug
Forum for Women in Democracy (FOWODE)
Website: (www.fowode.org)
Forum for Kalongo Parish Women Association
District: Agago
FOWODE Young Leaders Alumni Association (FYLAA)
Website: www.fylaa.org
Hope after Rape
Website: www.har.interconnection.org
Hunger Fighters Uganda
Website: www.hungerfightersuganda.org
Human Rights Network Uganda (HURINET- U)
Website: www.hurinet.or.ug
Initiative for Social and Economic Rights - Uganda
Website: www.iser-uganda.org
Institute of social transformation (IST)
Website: www.ist-tft.org
Innovations for poverty action (IPA)
website: www.poverty-action.org
Isis-WICCE
Website: www.isis.or.ug
Integrated Disabled Women Activities (IDIWA)
Website: www.idiwa.org
Jenga Afrika
Website: www.jengaafrika.org
Kiyita Family Alliance for Development (KIFAD)
Website: www.kifad.org
Muti Community Based Development Initiative
District: Abim
National Association of Women Organisations in Uganda (NAWOU)
Website: www.nawouganda.org
National Forum for People Living with HIV/AIDS Network in Uganda (NAFOPHANU)
Website: www.nafophanu.org
National Union of Women with Disabilities of Uganda (NUWODU)
National Union of Disabled Persons Uganda (NUDIPU)
Website: www.nudipu.org
Nen Anyim Community Based Group
District: Agago
Participatory Ecological Land Use Management (PELUM)
Website: www.pelumuganda.org
Patongo Counseling Community Outreach
District: Agago
Passion for community development organization
District: Agago
People Living with HIV/AIDS Network
District: Abim
Platform for Citizen Participation and Accountability (PLACA)
Website: www.placaug.org
Regional Associates for Community Initiatives (RACI)
Website: www.raciug.org
Rwenzori Consortium for Civil competence (RWECO)
Website: www.rweco.org Spinal Injuries Association- Uganda
District: Kampala
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Petition created on 10 October 2015