Finance Ministry Focusing on Strengthening Collaboration with Its Key Stakeholders

by Business Times
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By Apollo Munghinda

The overall mandate of the Ministry of Finance, Planning and Economic Development is to formulate sound economic policies that enhance economic stability and development, mobilise financial resources, regulate their management and ensure efficiency in expenditure, in addition to overseeing national planning and strategic development initiatives for economic growth.

In the delivery of this mandate, Parliament is responsible for approving the national budget every financial year and playing an oversight role, in addition to the legislation and representation of the electorate roles.

These mandates require in-depth understanding of the context in which the two institutions operate in order to ensure effective collaboration.

To strengthen the collaboration between Parliament, and the Finance Ministry, an engagement with the Parliamentary Committees of Budget, National Economy, and Finance, Planning and Economic Development was organised during the first week of September, 2023 at Lake Victoria Serena Kigo hotel. This engagement majorly focused on the key public finance reforms and the state of the economy.

Finance Minister Matia Kasaija who officiated at the meeting said, enhanced collaboration with Parliament will ultimately improve the budget process, noting that the economy has remained resilient amidst various shocks. He attributed this economic resilience to the effective coordination of relevant government institutions.

The economy is on the right path to full recovery with projected growth of 6% this financial year 2023/24 and projected growth of 6.5% in financial year 2024/25 and 7% over the medium term.

Programme Based Planning and Budgeting

The Minister of State for Finance in charge of Planning, Amos Lugoloobi explained to the MPs, the concept of Programme Based Planning and Budgeting in the context of the 3rd National Development Plan (NDP III).

Whereas the programme approach is in its third year of implementation, the Minister said there is need for some changes for effective implementation, such as; realignment of Parliamentary committees from the current sectoral setup to programme setup and well-structured development planning capacity building for Ministries, Departments and Agencies as well as Local Governments. These recommendations among others, came out clearly during the midterm review of the NDP III.

It should be noted that the sector-wide-approach had a number of shortcomings such as silo approach to planning, budgeting and implementation, poor coordination, duplication of activities and wastage of resources which the programme based approach is addressing by ensuring that resources are linked to results.

Uganda’s Fiscal Consolidation Strategy

The Permanent Secretary and Secretary to the Treasury, Ramathan Ggoobi made a presentation on Uganda’s Fiscal Consolidation Strategy which entails: Enhancing revenue collection; reducing borrowing to ensure long- term debt sustainability; and controlling government expenditure to ensure efficiency and effectiveness.

In this fiscal consolidation strategy, government is now focused on effective implementation of the domestic revenue mobilisation strategy (DRMS) to collect more revenue, continuous repurposing of the budget to move resources to areas of high multiplier effect on the economy as well as enhancing debt management through reducing domestic and commercial debt by leveraging new innovative sources without losing concessional financing.

Budget Execution and Financial Reporting

The Accountant General, Lawrence Semakula made a presentation on budget execution, financial reporting, end of financial year processes and key public finance management reforms.

He explained how the Treasury Single Account (TSA) operates. TSA is a single government bank account through which the government of Uganda transacts all its receipts and payments. The Treasury Single Account is funded from the Uganda Consolidated Fund (UCF).

The inflows from tax revenue, non-tax revenue and borrowing among other sources are received into the UCF and then transferred to the TSA to settle government commitments.

The Accountant General said that, the Treasury Single Account has minimised transaction costs during execution and ensures efficient control and monitoring of funds released to government agencies, as well as better coordination between fiscal and monetary policy implementation.

Prior to the implementation of the Treasury Single Account, government operated several bank accounts – Treasury General Accounts (TGAs) for each vote, but this operation of multiple bank accounts (TGAs) presented many challenges, including difficulty in ascertaining government’s cash position in real time.

During this engagement, the Finance Ministry also had an opportunity to make specific clarifications on two issues which some Accounting officers have raised as obstacles to service delivery while appearing before Parliamentary committees and these are; late disbursement of local revenue remitted to the treasury single account and delayed revoting of unutilised funds at the end of the financial year.

The Accountant General informed Members of Parliament about the swift processing and transfer of remitted local revenue that is within the appropriated budget by issuance of a cash limit equivalent to collections remitted.

He explained that, if a local government remits revenue over and above the appropriated, the Finance Ministry is required to seek for Parliamentary approval through a supplementary which sometimes causes delays in sending these funds to local governments.

In line with the public finance management reforms, it is important to support remittance of local revenue collections to the Single Treasury Account as opposed to local governments spending this money directly from local revenue accounts in commercial banks.

Regarding the issue of unspent funds at the end of the financial year, the Members of Parliament were brought to the attention of Section 17 (1) of the Public Finance Management Act (2015) (as amended) which states that: Every appropriation by Parliament shall expire and cease to have any effect at the close of the financial year for which it was made. All unspent funds on the Treasury Single Account, after reconciliation are returned to the Uganda Consolidated Fund.

What this means is that, there are no unspent cash balances at vote level at the end of the financial year, apart from residual balances from Missions abroad because of their unique financial operations when it comes to managing funds. Accounting officers cease to process any other commitments, and they are advised to cancel any unsettled commitments on the Integrated Financial Management System (IFMS).

It should be noted that, the Treasury ensures that all payments in transit at the end of the financial year are cleared by the Bank of Uganda. For the case of local government revenue, Local Governments reconcile with the Treasury and a cash limit of the certified unspent balances is issued to the Local Government in the subsequent year for allocation by their Councils.

This interaction with Members of Parliament was very fruitful in bridging the communication gap between Parliament and the Ministry. The Ministry is hopeful that the shared information will be effectively used by the Members of Parliament in performing their oversight function.

The Writer is the Principal Communications Officer, Ministry of Finance, Planning and Economic Development

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