April 1, 2014

Auditor General Faults Govt On Increasing Domestic Arrears

Auditor General John Muwanga presenting Speaker Rebecca Kadaga with the Financial Year 2012/2013 Audit Report
Auditor General John Muwanga presenting Speaker Rebecca Kadaga with the Financial Year 2012/2013 Audit Report

The Uganda Government has been put on the spot for failing to control and manage Uganda’s Domestic Arrears and Loan Portfolio.  

The  country’s Auditor General, John Muwanga raised the concern noting that his office has realized a continued increase in domestic arrears, from Shs473billion recorded in FY 2010/2011, to UGX 763 billion in the FY 2011/2012 and Shs1.1trillion shillings in FY 2012/2013.

In an extract of the key finding of the annual report, The Auditor General noted that despite the existence of a commitment control system, the total value of domestic arrears payable continues to increase over the years. The commitment control system is a financial management tool introduced in 1999/2000 to help eliminate arrears by ensuring that commitments do not exceed the ability to pay when they fall due.

Muwanga observes that the new figure is worrying and could create a financial catastrophe.

“This figure of 1.1trillion is worrying and the question arising is that to what extent is it going to keep rising, it is going to create a bit of a catastrophe,” Muwanga noted.

He said that the steady increase in the domestic arrears clearly indicates that the current approaches to addressing the problem are not working and that the debt figure may become unmanageable as it appears to be spiraling out of control.

On Government’s Loan Portfolio, the Auditor General observed that during the review, it was established that commitment fees paid by government have risen from Shs9billion in FY 2011/2012 to Shs12.7billion in the FY 2012/2013.

Muwanga said that the increase in the commitment fees arises from the slow implementation of planned projects hence commitment fees accruing. As a result of low levels of loan disbursements, these loans were attracting high commitment fees which could have been avoided, he added.

Accordingly, commitment fees paid during the year 2012/2013 increased by 40% from  Shs9.023 billion in 2011/2012 to Shs 12.7billion shilling in 2012/2013.

The Concerns are contained in the extracts of the key findings of the annual report of the Auditor General for the year ended 30th June 2013. The main Report was presented to the Speaker of the country’s Parliament Rebecca Kadaga.

Speaker Rebecca Kadaga stated that Parliament is equally concerned about commitments made since government has to wait for years before implementation begins but in the meantime commitment fees are paid immediately.

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