KAMPALA (HAN) November 14, 2015. Public Diplomacy & regional Security. Uganda’s parliament has finally amended the Public Finance Management Act (PFMA), sanctioning a return of supplementary budgets.
Passed just over seven months ago, the PFMA was seen as a progressive piece of legislation that would ensure financial discipline and safeguard resources allocated to key sectors such as health, education and agriculture, which often suffer cuts whenever reallocations are made to finance supplementary budgets.
Under the amended PFMA, the government will be allowed to reallocate 3 per cent of the total national budget for a supplementary without parliamentary approval.
The amendment, passed on November 11, will also see parliament allocate 0.5 per cent of the national budget to the contingencies fund, to be spent on natural disasters like famine, floods and disease outbreaks.
State Minister for Finance David Bahati said that despite an attempt by the government to remove mid-year reallocations in the previous law, it failed because there were no funds for contingencies.
“It is shameful when we fail to get money to deal with disasters like famine and floods,” he said.
In September for example, the government failed to raise money to buy food for the people of Karamoja when famine struck the region, resulting in the deaths of at least 28 people, and others fleeing to neighbouring Kenya.
Previously, money for supplementary budgets was appropriated at the beginning of the financial year and a maximum of 3.5 per cent of the budget was directed to the contingency fund; supplementary budgets took up 85 per cent of the contingency fund, and the remainder would go to natural disasters.
But during the 2015/16 financial year, when the Ministry of Finance allocated money to the contingencies fund, parliament reallocated it to other things including treating meningitis.
Despite resistance from the opposition, the government also managed to get parliament to pass a clause that allows the Ministry of Finance to get advances from the central bank without parliamentary approval, with a simple rider that this money is paid back within the financial year.
Without this clause, the government would fail to function at the start of the financial year when the Uganda Revenue Authority fails to collect enough money to pay for salaries and pensions.
However, parliament rejected other amendments, including one where government wanted to do away with the requirement to first get certificates of compliance for gender and equity responsiveness from the Equal Opportunities Commission (EOC) before the lawmakers can allocate money to the various institutions.
Deputy Secretary to the Treasury Patrick Ocailap had argued that this requirement delays the budget-making process, as the EOC lacks the resources to study both the budget framework paper and ministerial policy statements in good time to issue the certificate of compliance.
Parliament also threw out a proposal for government departments to return unspent balances to the consolidated fund four months after the financial year has ended. Instead, it retained the old system where unspent cash is returned to the consolidated fund at the end of the financial year in June.