IMF warns government on finance law amendments

Ms Ana Lucia Coronel, the IMF Uganda country representative . File photo

What you need to know:

Opposed. The proposed ammendments have been rejected by Members of Parliament.

KAMPALA. Three weeks ago, the International Monetary Fund (IMF) had given Uganda the thumbs up for implementing the Public Finance Management Act, 2015.
Little did the Fund know that after their review of the economy, the Ministry of Finance would come up with amendments to an eight month old law.
In an email response to Daily Monitor, Ms Ana Lucia Coronel, the IMF Uganda country representative warned that the amendments should be made in a much tighter language, to avoid being misinterpreted.
“In our understanding, the proposed amendments are intended to correct some flaws regarding the possibility of reallocating funds across votes, but the language should be tightened and carefully reviewed to avoid unintended consequences,” she said in an email.

The amendments
The Ministry of Finance proposed at least eight amendments to the act with most raising more questions than answers.
The ministry wants an amendment to allow the government to borrow money from the Bank of Uganda (BoU), in-case of a revenue collection shortfall without the approval of Parliament.
Additionally, they want lee-way on supplementary expenditure that was not provided for in the Budget.
There is also allowing for resource reallocation without the approval of Parliament.
There was overwhelming opposition by Members of Parliament when they were recalled from recess on October 14 to debate the amendments.
This forced Deputy Attorney General Mwesigwa Rukutana to request for more time to re-examine the amendments.

Principles of the law
Without responding to specifics of the amendments, Ms Lucia stated that the amendments should take into consideration the original principles of the law.
“Limiting temporary advances from the Central Bank to the government in size, and repaying them before the end of the fiscal year in all cases. Maintaining a contingency fund to limit increases in spending. It is not a good practice to use the contingency upfront at the time of Budget approval. It should be kept for contingent events,” she said.
Additionally, she also explained that in reallocating resources, it is necessary to get the approval from Parliament.

Expert concern
Dr Fred Muhumuza, former adviser to ex-Finance ministerMaria Kiwanuka, also told the Daily Monitor that allowing the amendments to go ahead would lead to Budget indiscipline. He was specifically concerned at the request for borrowing from BoU and removing the cap on supplementary expenditure. He noted that they (ministry of Finance) want the ability to borrow money from the Central Bank without the approval of parliament because it gives them a lot of lee-way to print money. He notes that the amendments were not brought in good faith.

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