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Policy makers query delay in making law on oil revenue

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An oil exploration machinery in Hoima. Policy makers are demanding the passing of laws that will protect public resources from oil among others . FILE PHOTO  

By ISMAIL MUSA LADU

Posted  Tuesday, September 2  2014 at  01:00

In Summary

Still waiting. Analysts say the passing of Public Finance Bill, 2012 is long overdue, given its importance in hedging financial indiscipline and mismanagement of resources in public sector—government.

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With the recent discovery of more oil deposits in the Albertine region, it will be a recipe for disaster if proposed legislations seeking to safeguard oil revenues are not expeditiously being passed into law, analysts from the academia and civil society have said.
In an interview with the analysts last week, it emerged that the passing of the Public Finance bill, 2012 is long overdue, given its importance in hedging financial indiscipline and mismanagement of resources in public sector—government.
“The Public Finance bill, 2012 is crucial in instilling discipline in public expenditure and resource management. It is important because it also provides for stringent punishment against those who either fail to do their work or mismanaged public resources,” the Makerere University Economics Prof Augustus Nuwagaba, said in an interview.
He added: “This law seeks to control foreign debts—it should not exceed 50 percent of GDP, control the untamable supplementary budgets and deal with those who deviate from the agreed rules. And it is for some of these reasons that this bill should have become law years ago.”
A press statement issued by The Southern and Eastern African Trade, Information and Negotiations Institute (SEATINI) recently advised legislators to take extra care when dealing with the wordings in the Public Finance Bill, 2012 or else it will be used for selfish reasons by dubious characters
“Parliament needs to review the clause on exemptions in the Public Finance bill as their are still gaping holes in the legislation, allowing individual ministers or other persons carry out discretionary deals with individual companies, while this has just been ruled unlawful by the Tax Appeals Tribunal,” reads the statement.
In an interview with CSBAG coordinator, Julius Mukunda, the civil society wants numerous changes in the bill before it is passed.
He said: “We are not contented with the Bill provision that spells out a number of offences and penalties. If one considers the offences in the Bill and the level of punishment, it’s not even worthy to prosecute a case under this Act.”
He continued: “At the highest level of penalty, a person will be charged Shs5 million and yet the offence ranges from opening and maintaining a government bank account without authority of the accountant general.”
Clause 21 (3) on the supplementary budgets; allows the minister to authorise up to 10 per cent of a sector budget as supplementary expenditure for any given financial year.
We feel this will heavily and negatively impact the work plans of the sectors and thus disrupt service delivery.
“For example, the agriculture sector budget of Shs440 billion for the FY 2014/15 can be disorganised by up to Shs44 million without Parliament’s approval.
This undermines the budgeting process and it is for this reason that we suggest the percentage be lowered to 3 per cent as is provided for in the Budget Act, 2001,” he said.
Clause 55 (3) states that oil revenues should not be used for recurrent expenditure which are considered recurrent.
We are of the proposal that since Uganda doesn’t, for instance, have a universal health or social security system, some oil revenue on recurrent government expenditure including on social services like health and education.
So it is on this basis that we urge government to amend this clause and allow 3 per cent of the oil revenues be spent on the social- economic sector recurrent budgets.
In the recent past, ‘Classified Expenditure’ has been used as basis to misuse public funds.
The current provision on the Bill is not strong enough to deter misuse of public funds through ‘Classified Expenditure’. A deeper analysis of the bill has been made and issued to MPs to use as a reference when debating the bill.
A senior member of the Committee on national economy, Mr Biraahwa Mukitale and Chairperson Committee on budget, Mr Lugoloobi Amos said the bill is now in advance stages in the parliament and what is left is passing it into law.
They both said it’s long overdue and that its importance in managing public revenue shouldn’t be underestimated.

iladu@ug.nationmedia.com