Uganda govt slashes ministry budgets to address deficit

After failing to prevail on parliament to pass the Finance Amendment Bill 2015, the Uganda government has decided to slash the budgets of ministries as a short-term measure to address deficits.

The Treasury is also putting on hold external borrowing.

Ministry of Finance officials acknowledge that the government made restrictive proposals in the Finance Bill, that are causing implementation challenges. To correct this, an amendment Bill was brought to parliament would give the government access to money in the consolidated fund.

In May this year, parliament passed the Public Finance Act that removed provisions for supplementary budgets and demanding that the budgets be gender sensitive. In addition, any unspent balances must be returned to the consolidated fund by June 30.

“We made errors, but we have also carried out reforms in the past two years. Now, my hands are tied. We are saying we need flexibility in the law,” said Secretary to the Treasury Keith Muhakanizi.

Last month, parliament adjourned indefinitely, after failing to pass the Bill on grounds that the government was amending the Finance Act to usurp the former’s oversight powers.

“I called parliament from recess and the Ministry of Finance failed to present their issues. They tried to smuggle in matters against the Constitution. Especially, they wanted open authority to get money from the central bank. What sort of public expenditure is that? We are supposed to control public expenditure let them amend the Constitution first before they take away our powers,” Speaker of parliament Rebecca Kadaga said.

Parliament also protested the government’s removal of provisions that ensured the budgets are gender-sensitive.

As the political campaign season gets more demanding for MPs working to retain their seats, parliament has had difficulty raising a quorum, leaving the Ministry of Finance with few options.

“We have the money in the budget as appropriated by parliament but we cannot shift expenditure. We can use it to pay the pensioners. The government is not broke, but it is this problem of non-flexibility. The quicker we can have the law the quicker we can get out of that confusion,” added Mr Muhakanizi.

Treasury starts the financial year without any funds because the taxman has not remitted any collected revenues, while any balances from the previous financial year are taken back to the consolidated fund, and accessing them requires parliament approval according to the recently passed Finance Act.

Apparently, budget performance in the first quarter of this financial year has been uneven. Statistics were not available by press time, but Mr Muhakanizi admits it has been a bumpy road, necessitating drastic measures.