Wednesday January 11 2017

Leaders should respect budgetary control structures

Finance Minister Matia Kasaija at Serena Conference Cent

Official. Finance minister Matia Kasaija. His ministry has released its budget performance assessment which ranked sectors on basis of absorption of the allocated funds. FILE PHOTO 

By Steven Turyahikayo

In 1986 I attended an interview contesting to become the chief accountant of Lint Marketing Board (LMB). I was the fourth candidate but was skipped when I stepped out to collect my children from the kindergarten. On return, I was informed about the disaster but was advised to wait in case the panel accepted to interview me as the last candidate. We had been called to report at 8.30am and having missed my slot at 1pm, I waited until 5.30pm. That I emerged the best candidate and became the LMB chief for seven plus years is now history.

During the interview, I was asked what I would do if the budget for the year ran out before the year ended. My answer was that I would inform the management before it happened so that they could institute saving measures to make the budget last its period.

One of the panelists thought I had not fully addressed the question and asked whether I had heard of supplementary budgets. I explained that I knew what it is but stressed that once there is no money, drawing a supplementary budget is of no use. I convinced them that my approach was more prudent and perhaps that’s why I emerged the winner.

Fast forward to our national budgets and the specter of supplementary budgets. Our budgets are made following a bottom-up approach whereby accounting officers present their wish-list presumably based on the anticipated activities or plans. Lengthy consultations and possibly some concessions follow. They are presented with fanfare with an infusion of past budget performance which is actually not correct given the immediate supplementary budgets that are presented to Parliament after budget day.

In the recent past we have witnessed supplementary budgets as high as 10 per cent plus of the original budget.
My understanding is that a supplementary budget should cover incidental operational costs which were not foreseen when the budget was drawn. They could include cost of services related to unpredictable occurrences such as floods, famine, etc. Best practice standards require that supplementary budgets be drawn following an appraisal of the approved budget and documenting proof of need for additional funds. It should be presented for approval before the expenditure is incurred.

However, the bulk of our supplementary budgets are not actually budgets borne out of appraisal of the approved budget but a list of expenditures already incurred and paid without approval of Parliament.

As I advised the LMB panel, supplementary budgets do not create money. They are actually the drivers of the perpetually overdrawn position of the Consolidated Fund, increased government borrowing from the banking sector, increased money in circulation and subsequently the instability in price levels.

It is not incidental that the bulk of our supplementary budgets originate from institutions that lead in corruption and wasteful expenditure in this country.

These institutions command the leverage that make budgetary management and control a futility. The recent bailout of Crane Bank of Shs200 billion, payment of Shs6 billion as a presidential handshake and many to come are consistent with past payments to Habo Group and others. It is a practice that shows a budgetary control system largely abused, compromised and dysfunctional.

It is high time the citizens called our leaders to order by demanding respect for the budgetary control structures. Remodeling of governance structures, elimination of corruption and cost management is more prudent than supplementary budgeting.

Mr Turyahikayo is an auditor and a former banker.