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Parliament has urged government to expeditiously release funds for donor-funded projects whose activities are ongoing.
The directive follows the presentation of a report of the Committee on Finance, Planning, and Economic Development on unspent balances and the position of the Consolidated Fund as of 30 June 2023.
The report was presented by the Committee Chairperson, Hon. Amos Kankunda during the plenary sitting on Wednesday, 31 January 2024.
The report indicated that the Finance Ministry has not released over Shs385 billion as unspent warrants for ongoing projects under the World Bank funded, Uganda Support to Municipal Infrastructure Development (USMID) and The Uganda Intergovernmental Fiscal Transfers (UgIFT) despite the availability of funds.
“On 01 July 2022, warrants to various local government votes equivalent to Shs734.8 billion had not been spent, 37 per cent was for UGIFT and 20 per cent was for USMID,” read the report in part.
A warrant is authority given by the Treasury to an accounting officer to commit and spend up to the amount of the warrant in a particular fiscal year.
Kankunda said that, by the closure of the financial year, Shs3.77 trillion remained as unspent warrants, which are the authorised expenditures that were never cashed. The committee observed that this was among the drivers for the rising domestic arrears.
MPs said this was unacceptable and a reflection of negligence on the side of the Finance Ministry and the technical officers within ministries and local governments.
“The World Bank has been here in several meetings, they are tired, and they might withdraw the funding. They wonder why government is not paying. Municipalities contracted suppliers, they are frustrated yet the money is available,” said the State Minister for Housing, Hon. Persis Namuganza.
Hon. Princess Persis Namuganza
MPs observed that such unpaid warrants should be prioritised in supplementary budgets. “Is it not a principle that arrears should have the first call in the budget? We urge the ministry to give these projects opportunity when considering the supplementary schedule, prioritising donor-funded projects,” The Deputy Speaker, Thomas Tayebwa who chaired the sitting, said.
Tororo District Woman MP, Hon. Sarah Opendi said there was an irregularity within implementation of donor-funded projects that ought to be addressed, where an individual contractor is given multiple contracts without the required financial capacity.
“You find a single contractor with contract lots in the eastern, western, and northern regions but without sufficient funds. I want to propose that for donor-funded projects, a contractor should not get more than one lot,” Opendi said.
She castigated the negligence on the side of technical officers who initiate procurements towards the closure of the financial year, cognizant that this is destined to lead to unspent warrants and ultimately, a rise in domestic arrears.
“An example of procurement, districts know exactly what they need but they wait for April to start the procurement process which is too lengthy,” she added.
MPs called for a further audit of unspent balances worth Shs58.9 billion as wages for staff recruitment.
“I do not know why we have denied people services when we live in an environment of continuous replacements. We know death is a reality and recruitment should be ongoing,” said Hon, Aisha Kabanda (NUP, Butambala District Woman Representative).
Hon. Musasizi
The Minister of State for Finance (General Duties), Hon. Henry Musasizi said he would study the Hansard to pick out MP’s recommendations and pledged to release funds for donor-funded projects.
“There are some unspent warrants as a result of poor planning that we can prevent. The commitment control systems require accounting officers to commit government when there is a work plan. It should be changed to say no accounting officer should commit government when there is no money,” said Musasizi.
Musasizi explained that the current financing mechanism is that the Finance Ministry under the single treasury account, issues warrants indicating the spending limits, and as such government entities are required to submit invoices which the ministry will honor depending on cash at hand.
It is against this, that Parliament passed an amendment to the report for the government to own up to its warrants.