Unraveling Budget row between Parliament and the Executive

Thursday May 7 2020



Many things have happened since a poorly executed measure to pass Covid-19 financing that ended up in a big row between the President and the Speaker of Parliament in which a war of words seems to have just cooled down.
In this row, Parliament earned the wrath of the public for appropriating to itself Shs10b to “supervise” food relief activitie. Two judges; Michael Elubu and Esta Nambayo found themselves in the middle of proceedings that should never have happened in the first place. As long as MPs’ activities related to their powers under the Constitution and were lawfully passed and there of effect, there was no cause of action. Not even a judicial review could stand as no procedural problems happened on the floor of Parliament.

But that’s an argument that’s of limited effect, even the public knows it. The public outroar was expected. In the current situation even a small expenditure of Shs20m became very expensive. Parliament, for its part, sounded reasonable for picking up this sum to allow its members to travel to their districts to do this oversight work.
Parliament cannot appropriate funds without consent and proposal of the Executive. Parliament has powers to authorise expenditures but on proposal of the Executive. Parliament cannot sit on its own and draft a budget. The more realistic term is that they improve, even where they use “emergency” powers, suspending budget rules to scrutinise what is before them.
This appears to have been the case and the safety in debate would have allowed MPs to get input from their constituents on whether this was a worthy expenditure.
Uganda’s budget laws provide for a budget envelope a big change, where Parliament passes broad numbers and the details of the expenditure through footnotes or votes on account. So Parliament does not have to come back for fresh scrutiny each time. This may have been an oversight but in this case a costly mistake.
Covid-19 and its major disruption of the economy is not a short term issue.
So the MPs have seen what was a “clean deposit” turn into a big expense. Think of all the bank charges, levy on deposits, withdrawals, commissions payable... If there are loans due, the banks take care of themselves first. I doubt such payments part of BoU’s moratorium.

Yesterday, the President said interest payments were wrecking the economy. Something hasn’t come out clearly whether Uganda is paying “interest only” or is paying fully amortised debt. The ledger item states Shs4 trillion “interest”.
This figure first arrived on the budget summary as Shs1 trillion, jumped to Shs2.3 trillion and now it’s Shs4 trillion.

Other countries are paying up substantial amounts already which is causing a lot of social distress. Gambia, Zambia even Kenya are all doing the same. Tanzania’s John Magufuli has warned against his fellow heads of state against this debt trap.
Most African countries are barely surviving. This is the time when commodities are a fallback, low prices, low volumes but liquidity for the treasury. Even the President has conceded this. Nothing like electronic that travel all the way from China to Dubai to Uganda and other countries.

Those come with instant effect to the Treasury attracting all sorts of taxes and surcharges but it’s a losing battle. Next time we look at the interest repayment, we shall be looking at Shs8 trillion overtaking Works and Transport (Shs5.8 trillion). Education and health sectors have all shrunk behind interest, money that is leaving the country to its owners.

Mr Ssemogerere is an Attorney-At-Law and an Advocate. kssemogerere@gmail.com