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A new fight breaks out over new budget allocations

The Executive has clashed with Parliament after it emerged that MPs had altered the national budget for the 2024/25 financial year approved last Thursday without the knowledge of technocrats in the Ministry of Finance.

Investigations by Monitor show that MPs readjusted the draft national budget estimates of Sh72 trillion to Sh750 billion. It is unclear under what authority parliamentarians reviewed and reallocated money from one agency to another.

Shs750b repurposed, repurposed or repurposed, according to documents seen by Monitorcovers 861 votes in different ministries, agencies and departments (MDAs) as well as local governments.

Surprised Finance Ministry officials discovered the changes during a senior management meeting on Wednesday, sources said, representing about one percent of the total approved budget.

At the meeting, sources indicated, it was considered that accommodating the readjustment within the three percent supplementary legal limit of Sh2.1 trillion still leaves a balance of Sh1.4 trillion.

Sources further indicated that the meeting resolved to prepare a report and refer the matter to President Museveni for guidance. The options that emerged, sources revealed, include allowing the President to give his approval to the Appropriations Bill and “creating an illegality” since it does not reflect what was approved. An Appropriation Act is a law that contains the amount of money to be spent by each MDA and local government and authorizes the withdrawal of funds from the Consolidated Fund.

The second option is to order Parliament to freeze the readjustment. The third option is to allow the budget as it is and “not tap the money” during the financial year “which is a technical possibility but an illegality in budget allocation,” the sources added.

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

The ITMS project was launched last November and the Ministry of Public Works indicated in March that only 240 vehicles had been equipped with the new plates. The ministry blamed the spate of sanctions imposed 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 Sh8 billion was taken from the operations of the Prime Minister’s Office to purchase iron sheets for Sh2.4 billion, maize seeds for Sh1.3 billion, plows for Sh900 million and oxen worth Sh3.3 billion for drought-hit Karamoja. The scandal surrounding an earlier theft of iron plates destined for Karamoja remains unresolved.

Sh50 million was transferred from the Ministry of Defense for land compensation and to pay arrears to the cash-strapped National Construction and Housing Company, which is 49 percent owned by the Libyan government. Another Sh20 billion was moved from the Microfinance Support Center for Emyooga funds (stimulus package for communities struggling to overcome Covid-induced crises) to non-Emyooga grants.

The Minister of Finance, Matia Kasaija. PHOTO/DAVID LUBOWA

Sources revealed that technocrats in the Finance Ministry sought advice from the Attorney General’s Office, which indicated that the reallocations made by Parliament are illegal.

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

Parliamentary Communications Director Chris Obore wondered how it could be “illegal for the Finance Minister to be present in the House when the budget was passed”.

He said: “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 brought it to the attention of the Speaker? Government things are formal, so have they written?

Fight for the cake
In mid-March, Ggoobi clashed with MPs from the Parliamentary Accounts Committee (PAC) over who has the deciding vote on the national budget. The budget is a statement of the revenue (taxes, grants, non-tax revenue and subsidies) that the government anticipates in a given financial year and how it plans to spend that revenue.

On March 19, Ggoobi clashed with PAC chairman and Butambala County MP Muwanga Kivumbi (NUP) while seeking a reallocation of Sh1.43 trillion without parliamentary approval. Ggoobi insisted that the reallocation is within the three percent of the budget that the Executive can vary without prior parliamentary approval.

Last Thursday, Parliament approved a budget of Sh72.1 trillion, an increase from the Sh58.3 trillion first approved in April. The unprecedented increase of Sh14 trillion is intended to cover, among other things; Sh7.7 trillion for Treasury operations, Sh1 trillion for Treasury operations, Sh427 billion for the Ministry of Agriculture, Sh352 billion for the Electoral Commission, among others.

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

In reshuffles that have upset Finance Ministry technocrats, Parliament repurposed Sh458 billion from the Treasury Operations vote, money that had been earmarked for bailing out Roko, a private construction company, and the controversial Specialist Hospital Lubowa.

Another 60 billion shillings were set aside from the Ministry of Finance vote, of which 30 billion shillings went to the Uganda Development Bank, 20 billion shillings to the Agricultural Credit Facility (ACF) of the Bank of Uganda and 10 billion shillings for economic policy research.

The Uganda Road Fund lost Sh40 billion, which will affect routine maintenance of local government roads, the Ministry of Commerce lost Sh20 billion and another Sh291 billion was shifted between MDAs.

During another senior management meeting in Finance on Tuesday, the acting budget director, Mr. Ishmael Magona, according to sources, noted that many of the affected votes had already been suppressed by 56 percent to conform to the initial budget of 58 billions of shillings.

“In the case of Treasury operations, the government will not be able to fully comply with its legal obligations. This means that the government will not pay debt, insurance, premiums for projects in which it is a prerequisite and payment of interest on Treasury bonds,” he noted.

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

During the implementation of the budget that begins in July, the meeting heard that priority will be given to salaries, pensions and bonuses, security-related expenses, social spending including health and education, local government subsidies , revenue-generating institutions and regulatory expenditures of the judiciary and parliament. and Roadmap of the Electoral Commission.

What the law says…
Section three of the Budget Act details that “the President shall cause to be prepared, presented and presented to Parliament in each financial year, but in any case, not later than June 15 of the financial year, estimates of revenues and Government expenditure for the next financial year.”

Article 13 of the Public Finance Management Law further details that the draft annual budget shall be prepared in consultation with relevant stakeholders, and the Minister (of Finance), on behalf of the President, shall present the draft annual budget of a financial year to Parliament, before April 1 of the previous financial year.

Section 13 (clause 4) provides that the President shall commit the draft annual budget to the Budget Committee of Parliament and to each sectoral committee of Parliament such part of the annual budget as falls within the jurisdiction of that sectoral committee.

The national budget will then come into force on July 1 of each year and will be compatible with the National Development Plan.

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