16 November 2012

Uganda: Key Reforms in Public Financial Management

The finance minister, Maria Kiwanuka, has unveiled several financial management reforms aimed at tightening control and management of public funds.

The reforms under the Public Finance Bill also provide for the management of the revenues from the oil production.

"Contained in this Bill I bring to you, are fundamental reforms in our public financial management, ways and practices intended to raise the thresholds for accountability and make the Government more accountable to Parliament and the people of Uganda," Kiwanuka said yesterday as she presented the Public Finance Bill 2012 to the parliamentary finance committee.

Kiwanuka said the process for the formulation of the Bill involved borrowing a leaf from nations with the best practices in the efficient management of public funds.

She cited Norway, the United Kingdom, Botswana and Timor Leste, whose experiences have been incorporated in the Bill to give it an international standard.

"The current wave of financial scandals, coupled with the delayed approval of this year's budget, should serve as an eye-opener to all of us to look within and objectively work together to improve our systems," she explained to the MPs.

Uganda's largest bilateral donor, the UK alongside Norway, Ireland and Denmark, recently announced their suspension of aid after a report by the Auditor General showed about sh38b was embezzled by officials in the Office of the Prime Minister.

On Wednesday, the World Bank said it was re-assessing its assistance to Uganda over corruption allegations.

Kiwanuka said the current mismanagement and theft of public funds necessitate a sound financial management system and strong legal framework.

"Not merely through paper accountability but with evidenced service and infrastructure delivery that boost production and the welfare of the population."

She explained to the visibly excited MPs that the Bill intends to give more powers to Parliament to control and monitor the expenditure of public funds.

"The measure of the best law is based on how many times Parliament is mentioned. I challenge any law that mentions Parliament as many times as this Bill does. It gives more powers to Parliament to manage public funds," Chris Kassami, the permanent secretary for the finance ministry, said.

"The Bill will guarantee the oversight role of Parliament to appropriate public funds. No public funds will be spent without approval from parliament." Kassami said.

Clause 77 of the Bill seeks to amend Bank of Uganda Act so that the bank no longer has powers to guarantee any payment to any person on behalf of the Government or make any advance to the Government without the prior approval of Parliament.

The Bill also seeks to operationalise the constitutional provision for contingency funds to constitute 3% of the national budget.

This, she said, would be a solution to persistent budget indiscipline arising from excessive supplementary budgets, which affect the alignment of the national budget implementation to the priorities outlined in the National Development Plan.

The committee chairman, Robert Kasule Ssebunya, observed that the Bill will attract a lot of debate.

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