Wednesday July 23 2014

Increase Parliament’s oversight role in managing public finances

By Peter Gwayaka Magelah

This week, Parliament started debate on the Public Finance Bill, 2012 (PFB). The Bill is aimed at reforming the public finance, budget and accountability sectors in Uganda as well as provide for the management of oil revenues. The Bill merges (and repeals) the present Public Finance and Accountability Act, the Budget Act on top of amending the Bank of Uganda Act, the Income Tax Act and the National Audit Act.

Whereas the Bill has some good reforms for the management of the public finance sector in Uganda, it skips important provisions, mainly the powers of Parliament and the relationship between the Executive and Parliament.

Some Members of Parliament have opposed the repealing of the Budget Act, mainly because it gave Parliament oversight powers over the Executive, a move that saw the World Bank and the IMF praise and recommend Uganda’s public finance regime for several developing countries. In response, the ministry incorporated nearly all the sections of the Budget Act into the PFB. However, the provision that gave Parliament powers to hold public officers accountable for mismanagement of funds has been left out. Section 18 of the Budget Act gave powers to Parliament to compel a minister or any public official to explain to Parliament the circumstances leading to failure in management of public resources.

Using powers under this section, the Public Accounts Committee of Parliament (PAC) has been able to compel ministers and different accounting officers to explain and in some cases, PAC has recommended punitive action against those found culpable.
The same section provided that a government official shall be personally liable for causing loss to government or a government institution. Liability of such officers would then be enforced through courts of law or recommendations to the public service in cases where such liability does not amount to a crime. Leaving out Section 18 of the Budget Act in the new public finance law will not only curtail Parliament’s powers to hold public officers accountable but also will make it easy for officers who cannot be charged in courts of law to go scotfree.

Another important provision that has been left out in the Bill is Section 44 of the Public Finance and Accountability Act, which is the other law to be repealed. The section gives Parliament powers to annul any statutory instrument made by the minister, where in the view of Parliament, such an instrument has lost relevance or where annulling it is in public interest. In practice, not everything can be legislated by Parliament. The minister is, therefore, given powers to make subsidiary legislation to enforce aspects that Parliament did not provide for. However, such subsidiary legislation should be in line with the parent law made by Parliament. In the case of public finance, subsidiary legislation is used mainly in creating special funds, rules of disbursement and accountability of funds and for the case of the PFB, it will also be used to describe which local governments get a share of royalties from oil.

The importance of Parliament having such powers can be seen in its control over the creation of special funds. Special funds are created under statutory instruments by the minister. However, as seen from several Auditor General reports, there has been mismanagement of public resources through special funds. In this case, Parliament would have powers to annul the special fund where they find it is not necessary or has been abused hence saving public funds.
As Parliament debates the PFB, it is important that they include the above provisions, which will make it easy for Parliament to carry out its oversight function within the realms of the law.

Mr Magelah is a researcher/lawyer – Advocates Coalition on Development and Environment (ACODE). pmagelah@gmail