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Fresh fight erupts over new budget allocations

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Finance Minister Matia Kasaija (centre) arrives at Kololo Ceremonial Grounds for the 2023/2024 National Budget reading on June 15, 2023. PHOTO/DAVID LUBOWA

The Executive has locked horns with Parliament after it emerged that MPs had altered the financial year 2024/25 national budget passed last Thursday without the knowledge of technocrats at the Ministry of Finance.

Investigations by Monitor show the MPs readjusted the draft estimates of the Shs72 trillion national budget by Shs750b. It remains unclear on whose authority the MPs revised and reallocated the monies from one agency to another.

The Shs750b repurposed, reallocated or readjusted, according to documents seen by Monitor, covers 861 votes across different ministries, agencies, and departments (MDAs) as well as local governments.

Shocked Ministry of Finance officials discovered the changes during a top management meeting on Wednesday, sources said, which are about one percent of the total approved budget. 

The meeting, sources indicated, mulled that accommodating the readjustment within the three percent supplementary legal limit of Shs2.1tn still leaves a balance of Shs1.4tn.

Sources further indicated the meeting resolved to prepare a brief for and refer the matter to President Museveni for guidance. The options floated, sources revealed, include letting the President assent to the Appropriation Bill and “create an illegality” since it does not reflect what was signed off. An Appropriation Act is a law containing the amount of money to be spent by each MDA and local government and authorises the withdrawal of funds from the Consolidated Fund.

Option two is to direct Parliament to freeze the readjustment. Option three is to allow the budget as it is and “not avail the money” during the financial year “which is a technical possibility but a budget allocation illegality,” sources added.

Snakes and ladders
Documents seen by this newspaper show that Shs3.5b was moved from the Office of the President to operations of the Intelligent Transport Management System (ITMS)—the government’s ambitious plan to equip all vehicles and motorcycles with digital number plates to fight crime—which was controversially awarded to a shady Russian company.

The ITMS project was launched last November, and the Ministry of Works indicated in March that only 240 vehicles had been fitted with the new plates. The ministry blamed the barrage of sanctions by the United States of America and the European Union on Russian companies—in response to Moscow’s invasion of Ukraine—for the slow implementation of the project.

Another Shs8b was moved out of the operations of the Office of the Prime Minister to purchase iron sheets at Shs2.4b, maize seeds at Shs1.3b, ploughs at Shs900m, and oxen at Shs3.3b for drought-stricken Karamoja. A scandal involving an earlier theft of iron sheets meant for Karamoja remains unresolved.

Shs50b was moved from the Ministry of Defence for land compensation to payment of arrears for the cash-strapped National Housing and Construction Company, which is 49-percent owned by the Libyan government. Another Shs20b was moved from the Microfinance Support Centre for the Emyooga funds—stimulus package for communities struggling through the shocks induced by Covid—to non-emyooga grants.

Finance minister Matia Kasaija. PHOTO/DAVID LUBOWA 

Sources revealed that Finance Ministry technocrats sought advice from the Attorney General’s office, which guided that the reallocations by Parliament are illegal.

The Ministry of Finance Permanent Secretary and Secretary to Treasury, Mr Ramathan Ggoobi told Monitor he will issue a statement to the effect. “I don’t want to engage in another public fight with Parliament. I will issue a statement,” he said by telephone.

Parliament’s Director of Communications, Mr Chris Obore wondered how it could be “an illegality when the Minister of Finance was present in the House when the budget was passed.”

He said: “The budget estimates are originated by the Ministry of Finance. The MDAs come and present their budgets and work plans to the Budget Committee, which then presents the budget report. If there is a problem, have they pointed out the matter to the Speaker; government things are formal, so have they written?”

Fight for the pie
In mid-March, Mr Ggoobi faced off with MPs on the Parliamentary Accounts Committee (PAC) over who has a deciding vote over the national budget. The budget is a testimonial of the revenues—taxes, grants, non-tax revenues, and grants—the government anticipates in a given financial year and how it plans to spend those revenues.

On March 19, Mr Ggoobi squared off with the PAC chairperson and Butambala County MP Muwanga Kivumbi (NUP) while seeking a reallocation of Shs1.43trillion without parliamentary approval. Mr Ggoobi insisted that the reallocation lay within the three percent of the budget that the Executive is allowed to vary without  prior parliamentary approval.

Last Thursday, Parliament approved a Shs72.1trillion budget which was an increase from the Shs58.3tn first approved in April. The unprecedented Shs14tn increase is to cater for, among others; Shs7.7tn for Treasury operations, Shs1tn for Treasury operations, Shs427b for the Ministry of Agriculture, Shs352b for Electoral Commission, among others.

The budget was passed without much debate and scrutiny, which the Kira Municipality MP Ssemujju Nganda likened to “running a kiosk.”

In the readjustments that have annoyed Ministry of Finance technocrats, Parliament further repurposed Shs458b away from the Treasury Operations vote—monies that had been earmarked for bailing out Roko, a private construction company, and the controversial Lubowa Specialised Hospital.

Another Shs60b was hived off the Ministry of Finance vote, of which Shs30b was for Uganda Development Bank, Shs20b for the Agricultural Credit Facility (ACF) at Bank of Uganda, and Shs10b for economic policy research.

Uganda Road Fund lost Shs40b which will impair routine maintenance of local government roads, Ministry of Trade lost Shs20b, and another Shs291b was moved around across MDAs.

During another top management meeting at Finance on Tuesday, acting director for budget, Mr Ishmael Magona according to sources, noted that many of the affected votes had already been suppressed by 56 percent to fit within the initial budget of Shs58tn.

“In the case of Treasury operations, government will not be able to fully meet its statutory obligations. This means the government will default on payment of debt, insurance, premiums for projects where it is a pre-requisite, and interest payment for treasury bonds,” he noted.

Members of Parliament during the plenary session chaired by the Speaker, Ms Anita Among, at Parliament on May 16, 2024. PHOTO/DAVID LUBOWA

During the budget execution starting in July, the meeting heard that priority will be given to wage and pension and gratuity, security-related expenditure, social spending including health and education, local government grants, revenue generating institutions, and statutory expenditure of judiciary, parliament, and Electoral Commission Road map.

What the law says...
Section three of the Budget Act details that the “President shall cause to be prepared, submitted and laid before Parliament in each Financial Year but in any case, not later than the 15th day of June in the Financial year, estimates of revenue and expenditure of Government for the next Financial Year.”

Section 13 of the Public Finance Management Act further details that the proposed annual budget shall be prepared in consultation with the relevant stakeholders, and the Minister (of Finance) shall, on behalf of the President, present the proposed annual budget of a financial year to Parliament, by the 1st of April of the preceding financial year.

Section 13 (clause 4) stipulates that the Speaker shall commit the proposed annual budget to the Budget Committee of Parliament and to each sectoral committee of Parliament the part of the annual budget that falls within the jurisdiction of that sectoral committee.

The national budget shall then be effective on July 1st of every year and consistent with the National Development Plan.