Is the Budget process being rushed in the 2016 election year?

Uganda’s budgeting process is currently moving ahead of schedule after Parliament debated and approved the Budget Framework Paper, nearly a month before the deadline. The passing of the Budget Framework Paper was preceded by a recall of Members of Parliament (MPs) from the campaign trail, giving them less than a month to scrutinise the documents and adopt or make amendments. Specific criticism has come from the Civil Society Budget Advocacy Group (CSBAG), which noted that MPs were more worried about getting back to the campaign trail and providing less scrutiny of the proposals made by the ministry of Finance, Planning and Economic Development.

However, both parliament and executive arms of government dispute that by insisting that passing the Budget Framework Paper early enough is a plus on their side.
In an interview with Prosper magazine last week, the chairperson budget committee in parliament, Amos Lugolobi, also the Ntenjeru North MP, said parliament passed the first stage of the 2016/17 national budget (Budget Framework Paper) that had been prepared by the executive early enough to give ample time for the parliamentarians to do their work of digesting elements of the 2016/17 Budget in various committees in parliament in time.

“Yesterday [January 6], we [Parliament] approved and adopted the first stage of the budget with the Budget Framework Paper. So far, we have moved ahead of time to have the framework paper and the report of the Budget Committee in Parliament laid in various committees in Parliament,” Lugolobi said.
Parliament is optimistic about beating the deadline of passing the budget as the law requires.
“Even though it is election year, we are progressing well with the preparation of the budget. We didn’t want to go into elections before we have passed the budget framework,” Lugolobi added.

Significance
The passing/adoption of the Budget Framework Paper (BFP) by Parliament signifies that the Public Finance Management Act 2015 has become an effective tool in the country’s budgeting process. This is so because it compels both the executive (Cabinet) and the legislators to do their work in time, paving way for timely implementation of budget and programmes.
The Public Finance Management (PFM) Act 2015 became operational on March 6, 2015. The Budget for the current Financial Year 2015/16, is the first since the commencement of the new Public Finance Management (PFM) Act 2015. The 2016/17 National Budget is going to be the second budget being executed under the Act.

This Act requires that the budget is approved by Parliament prior to the beginning of the financial year, usually July 1. It also aims to, among others, ensure accountability, enhance reporting for public resources, and increase fiscal discipline. The Act provides a framework and timelines for management of Budget. The Act, for instance, reduces the budget preparation and approval process from 12 to nine months, ensuring that the budget is approved before the commencement of the new financial year.
The Act also prescribes how oil revenue will be managed and invested, also provides for Parliament to approve a Charter of Fiscal Responsibility (CFR) that details government’s fiscal policy objectives, including the sufficiency of revenue, and the maintenance of prudent levels of public debt.

Parliament approves Shs20 trillion expenditure
In late December, MPs were recalled twice to discuss, approve and debate the Budget Framework Paper. Eventually, the MPs approved a Shs20 trillion expenditure kitty for the government with the bulk of resources expected to come from taxes.

The Budget Framework Paper indicates that the pool of resources the country will tap into will grow by at least 6.2 per cent. In fact, the expectation is that Uganda Revenue Authority collections will expand by Shs990b to Shs12 trillion. The Ministry of Finance is yet to announce new measures that will lead to increased tax revenues. However, in the framework paper, there was mention of eliminating some ambiguities within the law in order to boost revenue collections.
“The focus of increasing tax revenues for FY2016/17 is based on a strategy that will improve compliance by further improving tax administration efforts and allowing for implementation of policies put in place over the years. Efforts to ease tax administration will include measures to eliminate ambiguities within the tax laws so that compliance can be enforced by URA,” the framework paper reveals.

The government is also expecting a rise in budget support and project support to increase by about Shs700b.
Notably, with the rising cost of borrowing by government on the domestic markets, the Ministry of Finance proposed to borrow at least Shs600b less than in 2015/16.
Lugolobi explained to Prosper magazine that parliament is moving into the next stage of the budget process. “The next stage is for ministries to submit their policy statements and expenditure appropriation, which we call and supply to the various votes. After, we finalise the appropriation of funds of various ministries and make a final approval of the budget,” he said.

Lugolobi explained that before the appropriation is done, ministerial policy statements are sent to sectorial committees in Parliament for scrutiny, after which the sectoral committees make expenditure allocations and produce their final reports for expenditure apportion by parliament.
“We have time from March 1 up to May 31, to work on all these process and pass the Budget as required by the Public Finance Management Act,” he said.

Requirements of the Public Finance Management Act 2015
As per the Act, the minister shall for each financial year, prepare a Budget Framework Paper which shall be consistent with the National Development Plan and with the Charter for Fiscal Responsibility.
It spells out that the minister shall, with the approval of Cabinet, submit the Budget Framework Paper to Parliament by December 31 of the financial year preceding the financial year to which the Budget Framework Paper relates.
In an interview with Prosper, director budget in the ministry of Finance Kenneth Mugambe said the Budget framework from the executive side is done and it is now up to parliament to have the elements of the budget approved within the prescribed period as stipulated by the law.

“The law requires that by December 31 the Budget Framework Paper should be laid in parliament. We have already done our part from the executive side. This is because currently, the Budget Framework Paper is parliament, it is now parliament’s business (legislators) to ensure that they do all the necessary approval of budget in time,” he said.
Asked whether there could be a change in the date of approving and reading of the Budget since this is an election year, Mugambe said: “There is nothing which is going to change. The law requires that the Budget is approved May 31 and it is presented to Parliament on June 15, and that is what is going to happen.”

It has established principles and procedures for sound management of economy, execution of a charter of fiscal responsibility by the minister to Parliament at the beginning of a newly elected government.
Ensure integrity and predictability of the Budget by ensuring that funds are released as budgeted, operationalises the Contingencies Fund from which supplementary expenditures and emergences are funded.
It ensures seamless linkages/no overlaps in the Public Finance Management cycle, strengthening Budget oversight at all levels, full reporting on performance of entire government, including parastatals and state enterprises for better parliamentary oversight.
Lugolobi said with the Act in place, the Parliament does its work effectively regarding the national Budget.

“The Public Finance Management has brought in many reforms. It is now up to the executive to fail in their budget implementation. Unlike in the past when the budget is read and then approved/ passed later by parliament months after, things have now changed as the budget is approved before it is read and implementation of it starts at the beginning of the financial which is July 1,” he said.
Lugolobi added: “It is them (the executives to fail, they don’t have any excuse because everything is in time concerning budget. We don’t want to see them failing when everything is already provided.”
The other reform the Act has brought to light is: alignment of the budget to the National Development Plan by requiring for a certificate from National Palling Authority to demonstrate so and integration of petroleum revenue into the national budget.

Before the Act came into place, the budget preparation process, passing and implementation was characterised by many failures and delays resulting into poor performance of the national budget year in, year out despite increased resource allocation to ministries, departments and agencies. In fact it gives the Permanent Secretary in the ministry of Finance the authority to reject approving the contract of an accounting officer, if they fail to answer to queries in the previous budget.

Amended in less than year
In less than one year, Parliament made amendments to Public Finance Management Act on November 10, 2015 to allow government to borrow from the Central Bank without Parliamentary approval.
Lugolobi said: “They came to us asking for amendments, which we have done. We have approved 18 per cent threshold upon which the government can borrow from the central bank and then pay it back with the same financial year without default. This request has been approved; they can access funds from the central bank to fund the budget. So they have no excuse to lack and release of funds to programmes and projects in the budget.”

Concerning the power of Parliament under the Act, Lugolobi said it has made Parliament assume legislative power to allocate resources in critical areas where they feel it be.
“Under the Act, Parliament exercises its full power to cut and allocate resources. It enables Parliament to prepare the budget before it is read which is good for policy implementations,” he said.

The complaint from the Ministry of Finance was that implementation of this Public Finance Management Act was constraining the performance of government regarding expenditure in instances where the government was short on cash. Notably, there was a bounced cheque and delayed payments to civil servants due the inability of the government to borrow short term funds without approval of Parliament. The MPs also passed an amendment to increase the contingency fund and allowed more room for supplementary expenditure.