Follow law when withdrawing funds from petroleum fund – Wandera

In light of the recent events involving plans by the government of Uganda to withdraw Shs 450 billion from the Petroleum Fund to finance the 2019/2020 budget activities. We have come together to conduct this press conference.
We have noted that the planned withdrawal is contrary to the 2015 Public Finance Management Act which clearly states how the money from the Petroleum Fund should be withdrawn and used.

Section 58 of the PFMA 2015 states that “Withdrawals from the Petroleum Fund shall only be made under authority granted by an Appropriation Act and a warrant of the Auditor General” while section 59 (1) states that “The money withdrawn from the Petroleum Fund to the Consolidated Fund to support the annual budget shall not exceed the amount authorized by Parliament in the Appropriation Act”.

We have also noted that this is not the first time that the government is withdrawing money from the Petroleum Fund to fund other budget activities without following our financial laws. In 2018, Shs 200 billion was withdrawn from the Petroleum Fund to fund the FY 2018/19 budget. The withdrawal did not conform to sections 58 and 59 of the PFMA.
We also recall that in 2011 while addressing Members of Parliament, the Governor Bank of Uganda Prof. Emmanuel Mutebile informed the public that the President had asked him to use the national reserves amounting to $740 million to buy fighter jets and then refund that money with future oil revenues.

Moreover, the government has continued to withdraw this money from the petroleum fund without putting in place clear guidelines to show how oil revenues transferred from the Petroleum Fund to the Consolidated Fund and national budget is used in accordance with section 59 (3) of the PFMA that states that “… petroleum revenues shall be used for the financing of infrastructure and development projects of Government and not the recurrent expenditure of Government”

The transfer of oil money from the Petroleum Fund to the Consolidated Fund for the government to spend without parliamentary approval, as required by section 58 of the Public Finance Management Act 2015, will in itself be a sign of a lack of commitments to transparency and unwillingness to account to the citizens of Uganda. Moreover, no country can survive the oil course and “Dutch disease” if corruption and bad governance are allowed to infiltrate the oil industry. If corruption infiltrates into the oil sector, it will make it impossible for Uganda to exploit its oil and guarantee the conservation of critical biodiversity and uphold citizens’ livelihood rights.

In addition, If the planned withdrawal is successful, it will show that the government does not commit to following its laws on revenue management and commitments that require oil revenues to be used only for development purposes as opposed to consumption which will subjects these revenues to abuse by those entrusted with the power to manage it.

Furthermore, the violation will show a bad precedent on Uganda’s ongoing effort to join the Extractive Industries Transparency Initiative (EITI) whose principles are committed to upholding transparency in the collection and use of oil revenues.

Therefore, TI-U and ACCU are calling on the government to halt all the plans for the withdrawal of Shs 450 billion from the Petroleum Fund and follow the provisions stated in the PFMA.

We are also calling on Parliament to use her oversight powers over the Executive and direct the Minister of Finance to once and for all respect national laws and uphold transparency in the management and utilization of oil revenues.

In addition, we are also calling on the government to urgently formulate clear guidelines to show how money that is withdrawn from the Petroleum Fund now or in the future will be used for infrastructure development and not on consumption expenditure as required under the PFMA.

Article 62 of the PFMA stipulates the reasons for which money could be withdrawn from the Petroleum Fund, however, the Petroleum Revenue Investment Reserve that is tasked with sustainably investing these funds has not been constituted since 2015, we call upon the Government to expedite this process.

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