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Gov’t to raid Petroleum Fund for Shs 450bn

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Oil activities in Buliisa

Uganda government will once again withdraw money from the Petroleum Fund and use it to fund the 2019/20 financial year budget.

According to Bank of Uganda, government will withdraw Shs 445 billion which will be transferred from the Fund to the Consolidated Fund for government to pay for the 2019/20 financial year budget activities.

There is no money that has been put in the Petroleum Revenue Investment Reserve for investment, BoU notes in the 2018/19 report. This is not the first time government is drawing money from the Petroleum Fund to fund the budget. Last financial year, government withdrew Shs 200bn to fund the FY 2018/19 budget.

This puts into question government’s constant claim that it would save money from oil activities for the future. Paul Lakuma, a research fellow at the Makerere University-based Economic Policy Research Centre (EPRC) said in the ideal situation, Uganda should be keeping that money. However, he said, the country has many funding gaps, including infrastructure, health, education, and housing.

It cannot, he said, afford to keep money somewhere when it has all these unfunded needs. He said the question should be whether we are using the money to fund the right development needs.

“We’re a poor country, we cannot afford to put money abroad or in the bank. It is just politically unattainable. It is like President Museveni going around the country saying there is no money yet there’s money in an account. What is that money for? What is that money for that you keep saying we’re saving it for the future? Which future when you’re borrowing? My question would be, are they using the money correctly.” said Lakuma.

Officials from ministry of Finance told reporters that government can’t keep money lying idle yet it has unfunded priorities. BoU says for this lot, it has not received annual cash flow plan of government in line with section 59(2) of the Public Finance Management Act 2015, where money appropriated to the Consolidated Fund from the Petroleum Fund shall be withdrawn quarterly.

BoU said they had anticipated capital gains tax of about $167 million from Tullow Oil (U) Ltd on the sale of part of its stake to Total E&P and CNOOC (U) Ltd but the deal collapsed last month after the oil companies and the government failed to agree on tax relief and recoverable costs issue.

As of July 1, 2018, the opening balance on the Petroleum Fund was $87.3 million and Shs 121.8 billion. During the year, the inflows were of $1.4 million and Shs 54.7 billion while the outflows of Shs 200 billion was transferred to the Consolidated Fund to finance the 2018/19 budget.

Consequently, as of June 30, 2019, the Fund balance stood at $74.8 million and Shs 28.2 billion. The Fund’s money is kept in both dollars and Uganda shillings denominations.

—— AUTO – GENERATED; Published (Halifax Canada Time AST) on: October 17, 2019 at 07:03PM

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