Thursday, September 27, 2012
WHAT LOGIC IN HAVING A SUPLEMENTARY BUDGET BEFORE THE OFFICIAL BUDGET IS PASSED?
I will never understand the NRM Government mode of doing work. They came up with a budget for 2012/2013 where a good portion of the budget is to be funded by donors, which means that the budget is there but we have no capacity of realizing all the funds to fund it. Instead of seriously cutting on the existing budget, Government comes up with a supplementary. Should we believe that Government is going to print money to support that budget as the money is not expected within the financial year revenue collections, but has to be spent? This means that by the end of the financial year, money will have been put into the system which is not backed by productivity! William Kituuka Kiwanuka NRM MPs ATTACK PRESIDENT MUSEVENI OVER HEALTH SECTOR BUDGET Members of parliament led by Barnabas Tinkansimire on Tuesday morning attacked President Museveni for bribing some NRM MPs to change their position and pass the budget without approving the additional health sector money. Tinkasimire during a press conference at Parliament said that President Museveni yesterday called 160 NRM MPs in shifts of 40 to Rwakitura and he gave them money to influence them drop their support towards increasing the health budget by sh39 billion. He said that President Museveni told the MPs that a supplementary budget will be provided in two weeks after the budget is passed to cater for the needs of the health sector. Tinkasimire has said that this is a clear indication that President Museveni has become inefficient and should leave power for other able leaders to rule . ” An able leader should always advocate for the well being of the people he is ruling ” He has also said that President Museveni is only considering the defense sector yet there are many mothers dieing in hospitals with no medicine and nurses to look after them. Other MPs at the press conference included NRM’s Serina Nibanda, Theodre Sekikubo, Abdu Kantuntu and Winred Nuwaga among others. The MPs have promised to take the battle to the floor of parliament this evening and asked voters to curse all those MPs who will advocate for the passing of the national budget without approving the additional health sector money. Meanwhile, some NRM MPs are locked in a crisis meeting in which they are to reach a position on the health sector money before the afternoon session. ----------------------------------------------------------------------------------- RESPECT BUDGETING PROCESSES Source: http://www.accu.or.ug/index.php?option=com_content&view=article&id=658:respect-budgeting-processes-&catid=8:noticeboard&Itemid=20 Like every year, the Ministry of Finance and Economic Planning presented Ugandans with a budget for the financial year 2012/13, which outlined government’s proposals for getting and spending its money. Over time Civil society has raised its concerns about the extent to which Uganda’s budget proposals and expenditures address the needs and concerns of poor, vulnerable and marginalized Ugandans, that is, government allocates exorbitant amounts of money to non-productive sectors. As we begin to digest yesterday’s budget, we would like to express our concern on the usefulness of the whole budgeting process for Ugandans. This is mainly because: (1) We have witnessed high and increasing levels of Budget indiscipline where particular government agencies habitually demand for more funds in the course of the year, in the name of supplementary budgets. The trend for supplementary budgets has been on a steady increase from 4% in 2008/09, to 7.2 in 2009/10; and to 27.7 in FY 2010/11. This trend is eroding the credibility of the budgeting process. Moreover, we note, with concern, that a very significant portion of the amounts requested for in Supplementary budgets is spent on unproductive sectors. To aggravate the situation, there are items that are requested for under supplementary budgets that are unnecessary and/or lavish. For instance money requested for the President to give donations, and funds spent on entertainment – to the detriment of nodding disease victims and teachers. Other items like President’s inland travel which go for about (UGX 0 million per day) do not only demonstrate conspicuous consumption, but also portray a government that cares only for its own comfort, but not about the plight of its citizens. In February 2012 the Ministry of Health was struggling to find Shs7 billion to help nodding disease victims, yet State House was asking Parliament to approve a Shs92bn supplementary budget for the Presidency to be spent on special meals and drinks, welfare and entertainment, donations, and the President’s travel inland. As a result, the State House budget increased by 38 percent. We are concerned about the rampant requests for funding for unproductive sectors when critical sectors such as teachers’ salary, health care delivery, and roads are always denied urgent attention. In the same vein, less than two months to the end of the financial year (May 2012), Ministry of Defense requested for 132bn, which was in addition to the Shs. 495.7bn that had already been approved for it. of this amount, 21 bn was to be used for welfare and entertainment, 7bn on medical expenses, 23bn on classified expenditure, 22bn on staff salaries, and 24 bn on vehicle maintenance. Similarly, in February 2012, Police received a supplementary budget of 190bn, the bulk of which was spent on containing civil disobedience; and requested another 53bn in May 2012. To add onto the high levels of budget indiscipline, we note that in many cases the requests for supplementary budgets are brought when an agency has already used up the funds, and therefore require Parliament to approve the supplementary budget retrospectively. In essence, this puts Parliament in a corner; BUT also highlights an executive that has rendered Parliament and the Ministry of Finance powerless to deny their demands for more money. This mode of requesting for authorization after spending the money points to an erosion in the quality of planning and accountability processes in Uganda. (2) Secondly, we are concerned about the negative relationship between the rate of supplementary budgeting and Uganda’s external debt. Budget indiscipline has a direct bearing on Uganda’s propensity to borrow. If government cannot live within its means through paying for costly, but unproductive items; it resorts to borrowing to pay for the ‘developmental’ projects. At the time Uganda qualified for debt relief under the Highly Indebted Poor Countries (HIPC) Initiative in 1998, its External Debt stock stood at US$3.7bn. In 1998, 79% of Uganda’s foreign debt was forgiven; and in 2006, the Multi-lateral Debt Relief Initiative (MDRI) provided 100% debt cancellation reducing Uganda’s debt stock to $1.6bn. However, by June 2010, Uganda’s debt had more than doubled, and stood at US$4.3bn. By the end of March 2011, Uganda’s external debt was U$4.76bn. At the end of April 2011, a total of $669m new loans were approved thereby increasing Uganda’s foreign debt to $5.4Bn. Uganda’s 2012/13 budget framework paper noted that Uganda’s external debt financing will continue to constitute an important part of budget financing. New borrowings will finance infrastructure developments like energy, water and transportation that will enhance productivity, reduce economic growth constraints and poverty reduction. Government's medium-to long-term policies continue to support increases in public investment in infrastructure. However, this rationale is frustrated by the budget indiscipline in Uganda which has seen government spend excessively on unproductive sectors, and then resort to borrowing in order to finance infrastructure projects. In FY 2010/11, the Security and Public Administration sectors received 280% and 65% funding respectively, higher than their approved budgets yet other sectors, including key ones like agriculture received considerably less than approved budgets which affected implementation of key projects. Government’s levels of conspicuous consumption contribute to increasing our debt levels. When government allocates funds to meet selective officers’ medical bills, make donations and provide for exorbitant amounts for entertainment, then it has no option but to borrow for development projects. A prudent government which is mindful of the well-being of its citizens must make every effort to undertake austerity measures and thrift spending so as not to burden current and future generations with unsustainable debts. To date, Ugandans have been hoodwinked into accepting the country’s borrowing with statements that loans are contracted for priority sectors like agriculture, infrastructure, health and education. If government abstained from conspicuous spending and budget indiscipline, then the need to borrow money would also reduce. In any case, if government is borrowing funds for key sectors like health, WHY would we have supplementary budgets reflecting items on medical treatment for selected officers? How can the President’s donations constitute an emergency requiring a supplementary budget? Furthermore, high interest rates add to the cost of borrowing; which increases the burden of debt payment for Uganda, which already has a poor debt servicing record. Between January and March 2012, Uganda paid out $10m (sh25b) in debt servicing, which is barely 1% of its total external debt obligations in both principle and interest. (3) Thirdly, despite the fact that huge sums of money are spent on supplementary budgets and loans, a substantial amount of these monies is lost through corruption, and Ugandans therefore do not get value for the money. Despite a good legal and institutional framework, Uganda continues to be consistently ranked as one of the most corrupt countries in the world. Several cases have come up whereby the Executive gives Presidential directives on spending of public resources that has resulted in loss of tax-payers funds. Cases in point relate to the bicycle project scandal where the President DIRECTED the procurement of 70, 000 bicycles for local councils chairpersons to undertake mobilization ahead of the 2011 general elections. The Ministry of local government contracted Amman Industrial Tool and Equipment LTD (AITEL) and paid it UGX 5 billion before any bicycles had been delivered, flouting standard procurement procedures that require payment on performance of key milestones in contracts. Not surprisingly, the company could not be traced after obtaining the payment without delivering the bicycles. To date Ugandans do not know about the fate of the funds that went missing, yet taxpayers’ money is used to finance such projects, from which citizens do not benefit. Another case is the Burundi compensation where the President DIRECTED Ministry of Finance to pay more than Shs35.5 billion to Burundi for having supplied materials to the N.R.A rebels during the bush war of 1981-1986, which money was later converted into a national debt. A debt relief agreement was signed wherein Burundi cancelled Uganda’s payment of interest of Shs13.7 billion accruing on the debt, but the President reinstated it, arguing that Burundi was a poor country and therefore the $5.5 m should be paid as an ex-gratia to the people of Burundi. Government authorized payment of $13.6m but documents tabled before Parliament showed that the exact amount given to Burundi was $14.2 million (in excess of the authorized amount). During PAC investigations, the acting secretary to Treasury and Account General tabled letters from Ministers Syda Bbumba (Gender) Sam Kutesa (Foreign Affairs), Fred Omach (Finance General Duties) and former Attorney General Khiddu Makubuya offering a legal opinion clearing the deal. Furthermore, according to the PAC committee chairman Kasiano Wadri, out of Shs35.5 billion only Shs1.2 billion left the country. This was yet another case of abuse of public funds which were paid out without parliamentary approval and the mandatory Auditor General’s warrant. And finally, there was the inflated compensation payments to Bassajjabalaba to the tune of shs 169 billion following revocation of a contract to manage Nakasero and Owino markets. One of the senior officers implicated (governor of Bank of Uganda) declined to step down and pave way for investigation and was supported by the NRM party caucus, he was exonerated by parliament despite the huge loss of taxpayers’ money he had caused. In many of these instances, funds are lost after/through a Presidential directive, which undermines government laws, policies and procurement procedures. (4) Call to action a. Government should show that it’s a government for the people, and hence practice austerity measures through ABSTAINING from lavish spending and use the money to enhance the well-being of all Ugandans. b. Supplementary budgets should only be limited to real emergencies of a humanitarian nature. In other cases the technocrats should have done their job and planned accordingly. c. The executive should respect established institutions, laws and procedures to enhance budget discipline, reduce loss of funds d. Government should demonstrate that the budgeting process is useful hence exercise budget discipline. Ugandans do not need annual budget speeches when government cannot live within the budget. Whatever economic analysis we make of this budget will be meaningless because supplementary budgeting distorts the actual budget.’