Uganda’s parliament has been adjourned indefinitely after it had been recalled to amend the Public Finance Management Act (PFMA) and sanction a return to supplementary budgets.

During the debate on the amendments, Deputy Attorney General Mwesigwa Rukutana requested that the government be given time to re-evaluate some of the changes it had sought to introduce to the Act.

The amendments include allowing the government to seek retrospective approval of parliament four months after introducing a supplementary budget and getting interest-free advances from the central bank. 

Other proposals include allowing government institutions to return unspent balances to the Consolidated Fund in October instead of June 30.

The supplementary budgets had been capped at 85 per cent of the Contingency Fund under the PFMA, in an attempt to ensure that money appropriated at the beginning of the financial year is used for the right purposes. 

State House and the Ministry of Defence had become the biggest beneficiaries of supplementary budgets, which would be financed with money from sectors like health, roads and agriculture. 

However, with the passing of the PFMA, Secretary to the Treasury Keith Muhakanizi promised that money for the supplementary budgets would be appropriated at the beginning of the financial year by setting a maximum of 3.5 per cent of the budget for the Contingency Fund.

Passed just seven months ago, the PFMA was hailed as a law that would ensure budget discipline and equitable development. 

The PFMA specifies that government departments should first get certificates of compliance for gender and equity responsiveness from parliament’s Equal Opportunities Commission (EOC) before the lawmakers allocate money to the various institutions. The amendments remove this requirement.

However, Deputy Secretary to the Treasury Patrick Ocialap argues that this requirement delays the budget-making process, as the EOC lacks the resources to study both the budget framework paper and ministerial policy statements in good time to give the certificate of compliance.

Mr Ocialap said the commission would need at least one month to study and give certificates of compliance for over 370 ministerial statements.

The Parliamentary Committee on Finance, Planning and Economic Development, which scrutinises Bills before they are debated by the House, has rejected this proposal, arguing that it would hurt the country’s attempts to achieve equitable development and that its removal would also impact Uganda’s commitment towards the implementation of the 17 Sustainable Development Goals adopted in New York last month.

The committee’s stand came after the secretary of the EOC Erina Baingana insisted that the body had the capacity to study government budget documents and produce the certificates within the required time.

The committee, however, agreed to a proposal that will make it possible for the government to routinely borrow up to 18 per cent of the estimated revenues from Bank of Uganda without parliamentary approval.

The caveat is that this money has to be paid back within the financial year it was borrowed in, with no interest paid to BoU for the advance.

Julius Mukunda, the national co-ordinator of the Civil Society Budget Advocacy Group, said that having a law that allows borrowing from the central bank without paying interest, or opening the deal to public scrutiny, could cause monetary problems.  

For the 2015/16 financial year, for example, amendment of the law means that the government can borrow up to Ush2 trillion ($550 million) at any time, exposing the central bank to reduced reserves and constrained capacity to control exchange rates.