PAC grills Secretary to Treasury over Public Debt Management

Parliament’s Public Accounts Committee (PAC) has questioned the Secretary to Treasury Keith Muhakanizi over failure to prioritize and categorize domestic arrears under the stock of public debt.

Muhakanizi together with the Accountant General Lawrence Ssemakula were on Tuesday appearing before the committee to respond to queries raised by the Auditor General on the finances under Treasury Operations for the financial year 2017/2018 and 2018/2019.

PAC Chairperson Nathan Nandala Mafabi blamed the indiscipline by government agencies of accumulating arrears.

Mafabi also accused the Ministry of Finance of excluding domestic arrears from the stock of public debt in order to provide rosy figures of government’s liabilities. He said that such a move promotes financial indiscipline.

According to the Auditor General John Muwanga’s report for the financial year end June 2019, payables rose by 29 percent to Shillings 3.3 trillion. As of end of June 2019, the stock of public debt amounted to 46.36 trillion Shillings (USD 12.55 billion). Of this, the external debt was 30.85 trillion Shillings (USD 8.35 billion). The domestic debt was 15.51 trillion Shillings (USD 4.2 billion).

PAC Vice Chairperson Okin Ojara assured Muhakanizi that any charge on the Consolidated Fund is considered a public debt.

Masaka Municipality MP Mathias Mpuuga told Muhakanizi that it would be a big disservice to the country if he kept concealing this debt.

Muhakanizi denied trying to conceal the debt but argued that under Article 160 of the Constitution, public debt only includes loans, interest payable and costs and charges incidental to management of the debt. He said that this does not include domestic arrears.

He however conceded that government’s handling of domestic arrears needed improvement.

He said that the error of budgeting by arrears needs to end permanently also noting that the accumulated arrears had driven locals out of business.

Muhakanizi insisted that domestic arrears do not constitute public debt because public debt is restricted to borrowing or a guarantee that is authorized by Parliament or through an act of Parliament.

Further tasked by Jinja Woman MP Loy Katali about Accounting Officers who commit government in domestic arrears beyond the appropriated money, Muhakanizi appealed to the committee to avail him a list of accounting officers who commit government outside the budget and he take disciplinary action.

But the Accountant General Lawrence Ssemakula said that they were working out modalities on having earlier commitments take first call on the budget.

Last year, the Auditor General warned that although Uganda’s debt to GDP ratio of 41 percent is still below the International Monetary Fund (IMF) risky threshold of 50 percent and compares well with other East African countries, it is unfavourable when debt payment is compared to local revenue, which is the highest in the region at 54 percent.