Log in
Free: The Observer Mobile App - Exclusive Content and Services

Oil money already exhausted - minister Bahati

Minister of State for Planning David Bahati with the director Budget Kenneth Mugambe

Minister of State for Planning David Bahati with the director Budget Kenneth Mugambe

Government has exhausted resources in the Petroleum Fund, minister of state for Planning David Bahati has said. 
 
Government in the previous financial years since the establishment of the Petroleum Fund by the Public Finance Management Act (PFMA), 2015 has been withdrawing money to finance the budget.

The fund is overseen by the Bank of Uganda operating on three accounts. The accounts include a dollar and shillings accounts managed at Bank of Uganda and a third account in New York to facilitate the investment of revenue. The fund has two objectives including financing the budget and saving or investment for the future.

Bahati yesterday confirmed a zero budget allocation from the fund to support the coming financial year 2020/2021 budget despite previous allocations. Bahati together with the director budget in the ministry of Finance Kenneth Mugambe, and other officials were on Wednesday appearing before parliament’s finance committee to defend the Budget Framework Paper for the financial year 2020/21. 

The Budget Framework Paper indicates a zero allocation from the Petroleum Fund something that the parliament's finance committee chairperson Henry Musasizi sought for an explanation.

 
"In the previous two years you have been allocating money from the Petroleum Fund and in this year you have zero. There is no allocation at all, we want an explanation," said Musasizi.
 
In response, Bahati noted that there is no money in the Petroleum Fund and therefore government cannot appropriate what it does not have.  
 
"There is no money in the Petroleum Fund…We appropriated what was there last year so we cannot get what is not there. We’ve got to expand our revenue base." Bahati said. 

In the financial year 2017/2018, government withdrew Shs 125.6 billion from the fund in November 2017 to support the budget and also transferred another Shs 200 billion to the Consolidated Fund to finance the budget for the financial year 2018/2019.

In May 2019, parliament tasked government to put in place a petroleum investment framework to guide the investment of funds from the Petroleum Revenue Investment Reserve.

The decision followed a report indicating that the fund was not growing since funds therein were used to finance the national budget contrary to provisions of the Public Finance Management Act. It was also reported that the government had not put in place a petroleum investment framework as envisaged in the law.   

The then report by parliament's budget committee was prompted by government plans to raid the fund and pick Shs 445.8 billion to finance the current 2019/2020 budget shortfall.

 
But the report revealed that as of end of December 2018, the value of the fund stood at Shs 288.7 billion and that this reduction from Shs 470.4 billion recorded in June 2018 was due to a transfer of Shs 200 billion to finance the financial year 2018/2019 budget. 

The committee cautioned the government to contain its appetite for the oil funds before production kicks off citing depletion of resources in the Petroleum Fund with no clear indication on what the money is spent on.

The Public Finance Management Act 2015 provides that for the avoidance of doubt, petroleum revenue shall be used for the financing of infrastructure and development projects of government and not the recurrent expenditure of the government. 

In his audit report submitted to parliament in January 2019, auditor general, John Muwanga noted that there was no explicit mention of the fund as the source of funds but rather was disguised as medium-term expenditure framework for the financial years 2015/2016 to 2021/2022 submitted to parliament.     

The summary of the fund's inflows and outflows indicates that the opening balance of the Petroleum Fund was Shs 30.92 billion on July 1, 2017. During the financial year 2017/2018, there was an inflow of Shs 121.84 billion and an outflow of Shs 30.92 billion transferred to the Uganda Consolidated Fund account.

This implied that the closing balance at the end of the financial year was Shs 121.84 billion. In the financial year 2018/2019, there was an inflow of Shs 37.51 billion in the fund bringing the total balance in the fund at Shs 158.84 billion.

However, this was further reduced with an outflow of Shs 148.32 billion transferred to the Uganda Consolidated Fund account.  

Comments

+11 #1 Kelly 2020-01-09 16:30
Of course we knew the money can't be there. What with the insatiable appetite for money, land, properties of this dracula regime.

If they can strip off assets of parastatals, raid banks, impose high taxes etc , we would be fools to expect them to glee at hard cash seated "idly" on some account.

All we could do is allow this be another cause to build our anger level to red alert so that when the fires are ignited, there is no going back. Let's burn dem down when the time comes.

I mean Bahati is very scandalous to suggest "we need to expand the revenue base". Simple logic dictates that when inflow is 2 cubic metres per day and outflow if 3.5 cubic metres in the same period, the net accumulated reservoir is an empty tank!!!

You collect useless bunch of legislators, presidential advisers, state house maids and aides, non functional districts, hopeless programmes etc and still think money will come from heaven to fund all these? Mitscheeeew!
Report to administrator
+12 #2 Lysol 2020-01-09 22:10
The corrupt regime has used oil as a collateral to borrow money, even when the oil has not started flowing of the ground.

Oil(hydrocarbon). is a curse and not a blessing. At some in point in the future Uganda will understand that.
Report to administrator
+3 #3 rubangakene 2020-01-10 00:21
Now you have heard it from the 'horse's mouth'; no money. No wonder the big man now has time to visit Luweero.

Where can we go to borrow money now that we have exhausted all our sources? HAKUNA MCHEZO, KAZENI MKANDA TUU!
Report to administrator
0 #4 Kabayekka 2020-01-10 09:23
With all the officialdom at this government disposal, it can sit down and sort this problem out!
Report to administrator
0 #5 Simon Peter 2020-01-11 08:34
what surprises me most are the people like Bahat who are used to defend the rot all the time yet the main untouchables( beneficiaries) are busy enjoying somewhere, when it comes to accountability at some point the Bhatis of this world will suffer more than the real eaters
Report to administrator
+1 #6 Nasirumbimini 2020-01-11 09:14
You would expect someone t resign for this scandalous financial management. But not with these corrupt sharks.

You would also expect the police to step in and investigate and prosecute those behind abuse of our finances. But not with these hopeless and partisan police.
Report to administrator
+2 #7 Sempira 2020-01-11 10:57
what did we do to have thugs in power? They are the real curse to this nation.

All they do is to steal, plunder, kill and destroy. These are the angels of death. What a curse that befell this nation.
Report to administrator
0 #8 MR 2020-01-12 00:23
B.o.U foreign reserves are next.

This is what happens with a government with bad spending habits and no accountability for Returns on Investment/ROI.

Plus a useless nrm parliament that doesn't think before accepting surplus budgets. But then again most of them can't control their own personal debts and expenditures
Report to administrator
0 #9 Lakwena 2020-01-14 08:07
As long as Mr. M7, is president of this country and the Bahati, Ofwono Opondo, Afande Enanga, Onyango, etc. of this country are the spokespersons; Uganda is a very depressing country to live in.

In other words, these are guys who can sell their birthrights, mothers and country for a bowl of soup (price).

They have no clue about the proverbial "cake contradiction" that you can't eat your cake and keep it at the same time. You can't overspend and save at the same time.

The NRM leadership is the most morally bankrupt financially and economically indiscipline.

In other words, what did Ugandans expect a self-confessed criminal leadership that came to power through, violence including robbing the Central Bank Currency Center in Kable and Masindi UCB Branch?
Report to administrator

Comments are now closed for this entry