9 February 2017

Uganda: Govt Taking Steps to Reduce Domestic Arrears

Government is taking steps in ministries and departments intended to reduce and solve the problem of increasing domestic arrears, the Minister of State for Finance David Bahati has said.

One of the steps, the minister said was instituting prepaid systems for utilities.

"The biggest part of domestic arrears is on utilities; we are taking a number of steps to address this issue," said Bahati, adding that "We are ensuring that all government institutions are on prepaid systems for utilities."

Minister Bahati was responding to concerns raised by legislators during the debate on the Report of the Budget Committee on the National Budget Framework Paper for the financial year 2017/2018 - 2021/2022.

Basing on figures in the Auditor General's report for the year ended 30th June 2016, the Budget Committee said that domestic arrears had continued to escalate at 62% from sh1.39 trillion to sh2.25 trillion. The committee said that "the sh110 billion projected to be cleared in the financial year 2017/18 is unreasonably inadequate."

Bahati said that the ministry has allocated sh110 billion to cater for domestic arrears in the 2017/2018 financial year, which payments would be phased until they are cleared.

The minister also said that accounting officers would not be permitted to commit government without accompanying budgeting.

"We are making it clear that anybody who commits government without money will be held liable for the action taken. This is according to the Public Finance Management Act," said Bahati.

The minister said that the ministry has decentralized payment of pensions to various ministries like Education and Sports and Health.

Members wondered how long it would take for government to clear all pending domestic arrears. They said that businesses were collapsing as they failed to pay up on their bank loans. Members also said that the delay in payment of domestic arrears prevents the private sector from creating new jobs.

"The private sector is collapsing and banks are closing. Interest on their loans is accumulating, whereas government does not pay interest on the arrears," mSyda Bbumba (NRM, Nakaseke North).

The Shadow Minister for Public Service, Herbert Ariko (FDC, Soroti Munic) said no timelines had been given to clear sh597 billion for pension and death gratuity arreras; and sh96.2 billion in salary arrears.

Bahati said that they had asked ministries and departments to urgently clear the salary arrears.

He said that government had verified pension arrears amounting to sh120 billion, of which sh50 billion would be paid in the coming financial year.

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