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Parliament of Uganda Report of the Budget Committee On PARLIAMENT OF UGANDA REPORT OF THE BUDGET COMMITTEE ON THE SUPPLEMENTARY EXPENDITURE SCHEDULE NO. 2: ADDENDUM 2A AND ADDENDUM 3 FOR FY 2O19I2O Office of the Clerk May 2O2O \p6) 1.O INTRODUCTION Rt. Hon. Speaker, Government has so far laid before Pariiament supplementary expenditure requests for FY20L9/2O under the following Schedules: o On 3.d December 20 19, Schedule No.1 amounting to Shs 437.631 billion which is 1.O87o of the approved budget for the Fy 2OL9 /20. On 3.d March 2O2O, supplementaryexpenditure estimates under Schedule No.2 amounting to Shs 662.337 billion constituting --o/" of the budget. On 19th March 2O2O, addendum No. 1 to Scheduie 2 amounting to Shs 749.a2O billion of which we offset 90bn allocated to vote OO2 (State House),shs 6.98bn allocated to vote OO3 (OPM) and shs 4.O75bn ailocated to vote 001 Office of the President (Land Inquiry Commission) all coming under the 3% legal provision, giving a balance of shs638,878r692r30s requiring prior parliamentary approval . On 31"t March 2O2O addendum 2 to schedule 2 amounting to shs 284bn to cater for interventions in combating the COVID 19 Pandemic . On the 3 1st March 2O2O addendum 2A to Schedule 2 for the FY 2019 l2O of Shs. 2,4081360100. On the 2"d April 2O2O addendum 3 to Schedule 2 for the FY 2019 /2O of Shs. 16.576 billion. The supplementary estimates were referred to the Budget Committee for scrutiny and reporting to the House thereto. Before introducing the three addenda above, Ministry of Finance Planning and Economic Development had exhausted the 3% statutory iimit provided under section 25 of the Public Finance Management Act, 2015. The supplementary requests presented in this report require prior approval of Parliament before the funds can be released to the respective agencies by the Ministry of Finance, Planning and Economic Development. Rt. Hon Speaker, the report of the Committee is presented in two parts as follows: 1. Part A: Presents the Methodologr, Legal Framework, Status of Compliance and Preiiminary Observations 2. Pafi B: Presents the proposed Supplementary Estimates under Schedule No 2: KCCA; Addenda 2A and 3 for the FY 2OL9/2O; Observations and Recommendations \ 2 LD-rL> PART A 2.O METHODOLOGY The Committee scrutinized the Supplementary Schedules and held meetings with the foliowing MDAs in the effort to obtain additional information and justification for the expenditure: 1. Ministry of Finance, Planning and Economic Development; 2. Ministry of Kampala and Metropolitan Affairs KCCA 3. Management of Uganda Industrial Research Institute; including a visit to the industrial facility at Namanve. 4. Ministry of Gender, Labour and Social Development 3.O LEGAL FRAMEWORK Article 156 (2) of the Constitution of the Republic of Uganda states that 3'If in respect of ang financial gear it ls found. that the annount appropriated. for ang purpose und.er the Appropriation Act is insufficient or that a need has o'risenfor expend.iture for a purpose for whtch no amourtt has been appropriqted. bg that Act; or that ang monies haue been expend.ed. for ang purpose in excess of the amount appropriated. for that purpose or for a purpose for uthich tto amount has been appropriated. bg that Act, a supplementary estimate shouting the sums required. or spent shall be laid. d.oun before Parliament, utithin four months after the moneg ls spent."l The above article is operationalised under Section 25 of the Public Finance Management Act, 2015 which provides as follows; (1) That the tota.l supplementary expenditure tho,t requires ad.ditional resources ouer and aboue uthat is approued by Parliament shall not exceed. 3% of the total approued. bud.get for that tinancial gear, without approaal of Parliament. (2) Where fund.s are expend.ed. und.er subsection (7), supplementary estimates showlng the sums spent shall be laid. before Po,rliament within four months after the moneg is spent,2 Furthermore, Regulation 18(5), (6) and (7) of the Public Finance Management Regulations 2016 provide as follows: (51 "Parlio,ment mag approue a supplementary appropriation or the Minister mag approue a supplementary bud.get, as the case mag be, uthere the supplementary expe nditure is unauoid.able or unforeseeable." (6) For the purposes o.,f this Regulation; 156 (2) of the Constitution of the Republic of Uganda 25 of the Public Finance Management Act, 20 15 3 nl 2.O METHODOLOGY The Committee scrutinized the Supplementary Schedules and held meetings with the following MDAs in the effort to obtain additional information and justification for the expenditure: 1. Ministry of Finance, Planning and Economic Development; 2. Ministry of Kampala and Metropolitan Affairs KCCA 3. Management of Uganda Industrial Research Institute; including a visit to the industrial facility at Namanve. 3.O LEGAL FRAMEWORK Article 156 (2) of the Constitution of the Republic of Uganda states tbat ulf in respect of ang Jinancio,l gear it is found. that the amount appropriated. for ang purpose und.er the Appropriation Act is insufficient or that a need. has a,risen for expend.iture for a pufpose for uthlch no amouttt has been appropriated by that Act; or that any monies haue been expend.ed. for any purpose dn excess of the amount appropriated.for that purpose or for a purpose for uthlch rto o.mount has been appropriated. bg that Act, a supplementary estimate shouting the sums required. or spent shall be laid. down before Po,rliament, within four months after the moneA is spent."l The above article is operationalised under Section 25 of the Public Finance Management Act, 2Ol5 which provides as follows; (1) That the total supplementary expenditure that requires ad.d.itional resources ouer and aboue uhat is approued. bg Parliament shall not exceed 3o/o of the total approued. bud.getfor thattinancial Uear, utlthout approual of Parliament. (2) Where fund.s are expended. und.er subsection (7), supplementary estimates showing the sums spent shall be laid. before Parliament utithin four months after the moneg is spent.z Furthermore, Regulation 18(5), (6) and (71 of the Public Finance Management Regulations 2016 provide as follows: (5) "Parllo,ment mag approue o supplementary appropriatton or the Minister mag approue a supplementary bud.get, as the ca.se mag be, where the supplementary expend.iture is unauoid.able or unforeseeable." (6) For the purposes o.f this Regulation; lArticle 156 (2) of the Constitution of the Republic of Uganda 25 of the Public Finance Management Act, 2015 3 A.)l)'J >\ (a) "unauoid.q.ble" meants an expenditure that co,nnot be postponed to the nextJinancial gear through airementl (b) "unforeseeable" d.oes not includ.e an expend.iture that u)as foreseeable bg the uote at the time of preparation of the budget of the uote or o,tt expenditure thq.t should. haue been includ.ed. in the bud.get of the uote (7) Ang expenditure, which is fn excess of the appropriated. bud.get of aote and. which is not in accordance with this section shall be treated. cs loss of public fund.s as proaid.ed. for under section 79 (1) of the Act.3 4.O PRELIMINARYCOMMITTEE OBSERVATIONS 1. The Committee observed that the Supplementary Expenditure Schedules were laid in accordance with Section 25 of the PFMA 2015. 2. T}:e Committee noted that the totai Budget for Financial Year 2Ol9 /20 is Shs 4O,487,9O3,335,OOO trillion of which Shs. 27,957,163,419,000 Trillion was appropriated by Parliament while Shs. 12r53O.7 billion Trillion was approved as statutory expenditure. The Ministry of Finance, Planning and Economic Development is taking advantage of the astronomical increase in the annual budget ceiling that has provided more Iiscal space for suppiementary expenditure under the 3% window provided by the legal regime. 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 effect prior to the approval of parliament. It is a known fact that through supplementary spending, government has suppressed the approved annual budget in favor of funding supplementary expenditure. This practice needs to be discouraged by providing written guidelines to the government. These guidelines are being developed by the committee for presentation to the house for approval. PART B 5.O PROPOSED ADDITIONAL SUPPLEMENTARY REQUESTS THAT REQUIRE PRIOR PARLIAMENTARY APPROVAL UNDER SCHEDULE NO. 2 FOR THE FY 2Ot9l2O The additional Supplementary expenditure requests presented to the House for prior approval under Schedule No. 2 consist of the 18 of the Public Finance Management Regulations 2016 4 U"l'lto (a) Vote OO8 MFPED: Ushs. 3.9 billion (b) Vote OO8 MFPED: Ushs. 1.9 billion (c) Vote 122 - KCCA: Ushs 10 billion (d) Vote 110 UIRI: Ushs. 10 billion (e) Local Governments: Ushs.O776 billion (f) Vote 5O1 - Local Governments: Additional co-funding of Shs 9.O62bn for UGIFT. (g) Vote O18- MoGLSD: 2.408 billion 5.1 JUSTIFICATION FOR THE PROPOSED FUNDING af Vote OO8 Ministry of Finance, Planning and Economic Development- Ushs. 3.9 billion: The Committee was informed that in FY 2O7912O, Ushs.2.8bn was appropriated for the Privatization Unit. The amount included Ushsl.Sbn for Wages and Ushs1.3bn for non-wage to supplement the funding from the divestiture account. However, following the transfer of all divesture funds to the Uganda Consolidated Fund Account, the appropriated amount of Ushsl.Sbn was not sufficient to cover the salaries for the whole Financial Year.
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