Asking for more. The issue of supplementary budgets has for long dominated public debate, with many analysts arguing that the practice is a sign of poor planning by spending agencies. Finance Minister Matia Kasaija, however, says the view that supplementaries affect the funding to other agencies is unschooled, writes Ibrahim A Manzil.
Pending Parliamentary approval – retrospectively though – is the Supplementary Appropriation Bill 2017 to cater for expenditure amounting to Shs888 billion spent in Financial Year 2015/2016.
In the memorandum of the Bill dated June 23, 2017, Finance Minister Matia Kasaija asked Parliament to okay the supplementary already spent.
“The object of this Bill is to provide for supplementary appropriation out of the Consolidated Fund under Article 156(3) of the Constitution and Section 25 of the Public Finance Management Act, 2015, a sum of eight hundred eighty eight billion… shillings to meet additional expenditure for the Financial Year 2015/2016,” wrote Mr Kasaija.
The same would come back to haunt the Ministry in Financial Year 2016/2017, this time increasing to Shs969 billion.
There are specific agencies that request supplementary budgets with extraordinary frequency. The Uganda National Roads Authority claimed last Financial Year’s crown, with the Ministry of Works and Transport – their mother ministry – coming second, followed by the Ministry of Defence and Veteran Affairs.
Minister Kasaija told this newspaper in a telephone interview that he doesn’t support the practice of a supplementary expenditure but it cannot be avoided.
“I don’t like the supplementaries but we have to raise them if people are dying of hunger, there is a disaster somewhere, what do I do?” said Mr Kasaija.
This was demonstrated in the enactment of the Public Finance Management Act 2015, which, unlike the now repealed Budget Act of 2002, provided for expenditure to be first approved by Parliament.
But government could not fully comply with the provision of Section 25 of the Public Finance Management Act. An amendment was quickly brought to reinstate the position of the repealed Budget Act of spending and seeking retrospective parliamentary approval.
Had the original Section 25 stood the test of time, it would have averted a situation where the supplementary expenditure of a previous Financial Year drags up to 2017.
The chairperson of Parliament’s Budget Committee Amos Lugoloobi (NRM, Ntenjeru North) blamed this on the failure to provide for the Contingency Fund as required by the Public Finance Management Act and “indiscipline” from the spending agencies abetted by the Finance Ministry.
Section 26 of the Public Finance Management Act establishes the Contingency Fund and requires Parliament to appropriate for it every Financial Year. Section 26(1) states that “There is established a Contingencies Fund which shall, every financial year, be replenished with an amount equivalent to three and a half per cent of the appropriated annual budget of Government of the previous financial year.”
This is the fund which would be used by government agencies for any unforeseen expenditure.
“Supplementary expenditure is a matter of discipline. Sticking to the approved budget would be the way to go. We need to provide resources for the contingency fund to stop the practice of encroaching on the budgets approved for agencies and departments of government,” said Mr Lugoloobi.
He adds that “there is gross [financial] indiscipline on part of the agencies and the people who release this money to the agencies, [by] allowing the release of supplementary expenditure that does not meet the requirements.”
On the issue of failure to provide for the contingency fund, Mr Kasaija passes the buck to Parliament, which he says thwarted his first attempt to establish the fund.
“We proposed in the Public Finance Management Act that we create what we call a contingency fund and the first time that law was passed, I put money, about 70 billion, but Parliament did not appropriate it,” said Mr Kasaija.
He now says “because of pressures I have got, new roads, oil roads, hunger, I can’t find money to put in that fund.”
This view is opposed by Mr Julius Mukunda, the coordinator of Civil Society Budget Advocacy Group, who says MPs cannot be trusted with the contingency fund without sufficient system checks to curb abuse.
“[Given] the current state within which our budget is governed, you don’t want a contingency because you need to keep meat away from hyenas. They will allocate that money amongst themselves,” he says.
Mr Kasaija, however, maintains that all supplementaries meet legal requirements established under the Public Finance Management Act.
“All supplementary expenditure I put my signature to can’t wait. I issued, for example, a supplementary amount of money to pay court. If I didn’t pay, now the fellows go back to court and the bill is multiplied because of interest,” said Mr Kasaija.
He disagrees with claims that his ministry is indisciplined, saying it is the spending agencies and not the Finance Ministry that spend the appropriations.
“I don’t agree when [Lugoloobi] says we are the people who are undisciplined. How? We are not the ones who ask for these supplementaries… I disagree when he says it is indiscipline on the part of the Ministry of Finance,” he said.
Economist Ramathan Ggoobi, a lecturer at Makerere University, says the supplementaries would not be a bad idea. The problem, he says, is that they are subject to abuse “in countries like ours with governance challenges.”
“The world over, countries have supplementary provisions in their budgets because you can’t be perfect in budgeting for the future because right now they are finalising the budget process for 2018/2019. Imagine planning now for things to happen in 2019,” said Mr Ggoobi.
He, however, adds that “the problem is that in countries with governance challenges like ours, such arrangements can easily be abused.”
Mr Ggoobi says the way to go is to define what exactly supplementary expenditure should be used for.
“You cannot say that you are going to spend on recurrent non-wage supplementary. The only thing maybe you can ask for supplementary is development expenditure,” Mr Ggoobi proposed.
Matters like wages, he said, which can be foreseen, should as a matter of principle never call for supplementary expenditure.
Mr Ggoobi says Uganda’s current situation predisposes it to unscrupulous, corrupt cartels that may work to dubiously procure supplementaries for plunder.
To cure this, he prescribed entrenchment of provisions of law relating to supplementaries.
“In some societies where they know that people who are holding the offices and those who are going to approve the supplementaries can easily be captured [to become] a cartel, the way forward is to remove those arrangements and you lock in those kind of expenditures within the law to deal with the governance challenges,” said Ggoobi.
Whereas entities ask government for supplementary funding, ultimately some monies are returned to the consolidated fund at the end of the Financial Year.
Unspent funds in the Financial Year 2016/2017, for instance is up to Shs81billion, about the exact amount that Mr Kasaija had in the first place proposed for the botched contingency fund.
Curiously, the health sector, with perennial under-funding complaints, took the lead in unspent monies with Mulago National Referral Hospital as the flag-bearer at Shs3.4 billion.
But what exactly should supplementaries be used for? Ms Cecilia Ogwal (FDC, Dokolo) says it should strictly be applied to enhance productivity in the economy.
“Generally, a good budget with its supplementary should focus on production expenditure. We spend a lot on expenditure which does not increase our economic productivity,” said Ms Ogwal.
She Ogwal adds that the idea of supplementaries offend the budget and expenditure plan of departments and agencies that suffer the cuts to fund the supplementaries.
Mr Lugoloobi agrees, saying: “We should not be seen to be cutting budgets except when resources are not being used, and then they can be given to other agencies with need.”
Mr Kasaija says the view that supplementaries affect the funding to other agencies is unschooled because that is not what happens.
“When we are approving a supplementary, we are not encroaching on any budget item,” he said.
Mr Mukunda says that ministries, government agencies and departments use supplementaries to avoid budgeting for their sectors beforehand, choosing to upstage Parliament with a request so central to their priorities it cannot be turned down.
This, argues Mr Mukunda, sets the approved funds for abuse.
“There is too much indiscipline in the budget process. You find that sector priorities are not prioritised in the budget making process because you know that in the middle of the process you can come back and ask for a supplementary budget when it is the major focus of the sector and nobody will raise an issue.”
Mr Matia Kasaija’s solution to the supplementaries is to have the contingency fund in place anyway.
“The answer would have been to have the contingency fund, but unfortunately I have not been able to put in money over the last three years,” he said.
In the next Financial Year, whereas the process is going to take the usual cycle of an entire year, as night follows day, there will be a supplementary expenditure.
The argument now shifts to the use government should, by law, prescribe for the use of supplementaries.
To avoid situations where money is spent by way of supplementary expenditure on peripheral issues, there should be strict legislation on sectors that may place a request for a supplementary expenditure, and the activities clearly defined.