Parliament of Uganda Oiy the Supplementary
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PARLIAMENT OF UGANDA R-EPORT OF THE BUDGET COMMITTEE OIY THE SUPPLEMENTARY EXPENDITURE SCHEDULE NO.l AND SHEDULE NO. 2 FOR FY 2O18l19 Office of the Clerk May 20 19 U ( 1.O INTRODUCTION Rt. Hon. Speaker and Members, on 6'h March2019, Government laid before Parliament supplementary expenditure estimates under Schedule No. 1 amounting Shs 462.84 billionand anaddendum to Supplementary Schedule 1 amounting to Shs 3.547 billion. This brought the total Supplementary Expenditure under Schedule 1 to Shs 466.388 billlonwhich is 1.4% of the approved budget (Shs 32,7O2.A billion) for the FY 2018/ 19. Furthermore, on 20ft February 2OI9, the Hon. Minister of Finance, Planning and Economic Development Iaid before the House Supplementary Expenditure estimates under Schedule No. 2 amounting to Shs 1,1?3.816 billton(which is 3.60lo of the approved budget). Shs 4()3.526 bllllon under schedule 2 has already been authorized as expenditure within the B% legal provision while Shs770.239 billton requires prior parliamentary approval before expenditure can be authorized. In addition, the Hon. Minister of Finance, Planning and Economic Development further laid an addendum to Schedule 2 for the Fy 201g/19 of Shs 45, 627, 556, L25 Tables A and B below show a summary of the Supplementary Expenditure for FY2018/19 and the Sources of financing the Supplementary Expenditures respectively: Table A: Summary of Supplementary Expendlture by Schedule and Source Schedule 1 Schedule 2 Addendum Pendlng (1) Prlor Approval Authorlsed Authorised by Addendum Source by MFPED by MFPED Parllamcnt ( 1-31 Total 3.547 Recurrent 20t.677 249.r4A 44.90 t9 .7 A5 519.06 Development 261.L64 154.424 725.339 25.842 t,166.77 Total 462.44 3.547 403.576 770.239 45.627 1,685.83 Source: MFPED& PBO Computatloos N h 2 Table B: Details of Sourcea of Firanclng the Supplementary Expenditur€ Schedule 1 and 2 Sourcc Amount lBnl Govertrment of Usanda lcoul 1,537.27 o/w Additional Funding from URA Tax Revenue 601 .33 o/w Proceeds from Telecomlicense and Capital Gains Tax 2ao.o46 o/w Suppression of Releases 27 5_49 o/w Domestic Borrowing for MoD 380.00 Additionel fundlng from Appropriatlon ln Ald 40.13 Addittonal External Finencing 1()8.435 TOTAL 1,685,83 Source: MFPED& PBO Computatlons Rt. Hon. Speaker, the House will be reminded that owing to some expenditure pressure from Government Parliament considered and approved as a special caseShs zaO,o'46,776t933 development expenditure under Vote 016 Ministry of Works and Transport for procurement of aircrafts under Uganda National Airline Company Ltd and Shs 12,OOO,OOO,OOO ground rent arrears to Kampala Archdiocese under Vote 156 Uganda Land Commission. This would have the effect of reducing the funds now required for prior approval to Shs 478.192 billton. Rt. Hon Speaker, the Budget Committee now wishes to present the Committee Report to the Augu.st House in three parts as follows: 1. Part A: Presents the Methodolory, Legal Framework, Status of Compliance and Preliminary Observations 2. Pett B: Presents the proposed Supplementary Estimates under Schedule No I for the FY 2Ol8/79; Observations and Recommendations 3. Part C: Presents the proposed Supplementary Estimates under Schedule No 2 for the FY 2Ol8/19; Observations and Recommendations ? 3 PART A 2.O METHODOLOGY The Committee scrutinized the Supplementary Schedules and held meetings with the following MDAs in the effort to obtain additional information and justilication for the expenditure: 1. Ministry of Finance, Planning and Economic Development; 2. State House; 3. Office of the President; 4. Ministry of Lands and Urban Development; 5. The Minister of Water and Environment; 6. Ministry of Health; 7. Ministry of Ener$7 and Mineral Development; 8, NAADS; 9. Ministry of Agriculture, Animal Industry and Fisheries; 10. Ministry of Gender, Labour and Social Development; 1 1. KCCA 3.O LEGAL FRAMEWORI( Hon. Members, Article 156 (2) of the Constitution of the Republic of Uganda states that "If ln respect oJ ang flnancld.l gear lt ls found. thdt the dmount approprlated for dng purpose under the Approprla:tlon Act is lnsulficient or that a need ho,s arlsen for etcpendlture Jor a purpose for uhich no amourtt ha.s been d.pproprldted bg thdt Act; or that ang monies haue been expended for ang purpose tn excess o.f the amount appropriated for that purlrose or for a purpose for whlch no dmount has been approprlated bg thdt Act, a supplementa,ry estlmr:te shoulng the sfltms required. or spent shall be lald doun before Pafllament, withln four moraths dtaer the moneg ls spent."r The above article is operationalised under Section 25 of the Public Finance Management Act, 2015 which provides as follows; (7) That the total stpplementdry expendlture that requlres addltlonal resources oaer and, aboae uhat ls approued bg Parliament shall not exceed. 3%o of E tota.l approaed budget for thdt findflcldl gedr, wlthout approual of Parllament. (21 Where Junds are expend.ed under subsectlon (1), atppletnentary estimdtes shoulng the sums spent shall be latd before Parllament wlthln tnonths afier the money ls spent.z four u{a l4rticle 156 (2) of the Constitution of the Republic of Uganda 2section 25 ofthe Public Finance Management Act, 2015 4 a (c Furthermore, Regulation 18(5), (6) and (7) of the Public Finance Management Regulations 2016 provide as follows: (5) "Parliament mag approae a supplementdry appropriation or tlle Mlralster mdg approue a supplementary budget, ds the cdse mag be, where the supplementdry expendidffe ls unaaoiddble or unJoreseeable.' (6) For the purposes of thls Reguldtion; (a) ?"unauoidableu means dn expend.ittre that ca/r7.ot be postponed to the next ftnanclal gear thtough ttlrement;, (bl (u4foreseeable" does not tnclude dn expendlture that wd.s loreseeable bg the aote dt the time ol ptepdrdtlon of the budget oI the aote or an expendlture that should haae been iacluded 7n the budget of the oote (4 Ang expendlture, whlch is ln excess of the dpproprlated budget of rote and uhich ls not ln accordance ulth thls section shall be treated as loss of publlc funds as prould.ed Jor und.er sectlon 79 (7) of the Act,s 4,O PRELIMINARY COMMIT.TEE OBSERVATIONS 1. The Committee observed that the Supplementary Expenditure Schedules were laid in accordance with Section 25 of the PFMA 2015. The dates of the submissions were within the four months' timelines. 2, The Committee noted that the total Budget for Financial Year 201-8119 is Shs 32,702.815 Btllton of which Shs. 22,535.301 Billion was appropriated by Parliament while Shs. 10,167.513 Billion was approved as statutory expenditure. The Budget has witnessed significant growth in volume over the years thus providing more fiscal space for supplementary expenditure. 3. The committee is concerned about the growing number and frequency of supplementary requests as evidenced above. This worsening trend undermines the credibility of annual planning and budgeting as entities appear to be avoiding detailed scrutiny during the normal budget process in favor of supplementary budgeting whose expenditure can be allowed to take effec L prior to the approval of parliament. Most of this expenditure should have been foreseen and is too big to have been missed during normal budgeting. rRegulation l8 of the Public Finance Managemenr Regulations 20 l6 5 For instance; a request of UGX2SObn for buying aircrafts or a request of UGX 380bn for defence spending could not have been an afterthought. These uncontrolled supplementary requests cause major distortions on the budget. 4. The committee notes that using the Single Treasury Account, the Ministry of Finance sometimes arbitrarily suppresses budgets of MDAs without securing any reallocation approvals from the affected accounting officers. This seriously undermines the role of Parliament as the authority respoosible for appropriating resources and should not go unchecked by the House. The Committe€ shall, subject to artlcle 156 of the Constltution and section 25 of the PFMA, develop a checkllst to gutde the Mlnlstry of Finance, Planning and Economlc Development and MDAs on the consideratlon and approval of supplementary expendlture requests by the Commlttee. 'i\ 6 PART B S.OSUPPLEMENTARY EXPENDITURE ESTIMATES UNDER SoHEDULE 1 FY 2018/ 19 The Committee notes that the supplementary expenditure under the Schedule No. I for the FY 2018/19 amounts to Shs 466.388 billion out of which Shs 205.224 billion is recurrent expenditure while Shs 267.16+ billion is development expenditure(See Appendix 1 for details). 5.1 JUSTIFICATION OF SUPPLEMENTARY EXPENDITURE REQUESTS BY VOTE A} RECURRENT EXPENDITURE L Vote OO1- Office of the Presldent The Ofhce of the President requested for additional funding of Shs 84.805 billion to cater for facilitation of the Land Inquiry Commission, domestic arrears and classified expenditure under Internal Securit5rOrganisation. The Committee upon scrutiny of the detailed supplementary schedules from the MoFPED, noted the following; a) Out of the 84.805 billion, 73.105 billion was allocated for classified expenditure; b) 6 billion for l,and Commission of Inquiry; and c) 5.7 billion was for compensation to National Housing and Construction Company for the land strategically occupied by State House in Entebbe. U. Vote OO2 State House An additional Shs 79,105,114,512 was provided to cater for unforeseen expenses under classified expenditure. III. Vote OO3 Ofllce of the Prime Minister Additional Shs 467,156,000 was provided to meet expenses related to resolving Apaa Land conflicts in Northern Uganda. IV, Vote 006 Ministry of Forelgn Affalre Additional Shs 1,000,000,000 was provided to cater for the facilitation for hosting the 9frHigh Level meeting of the Regional Oversight Mechanism meeting.