Understanding

the Public Finance

Management Act, 2015
A simplified Version
of the PFMA, 2015

SBAG
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Understanding the Public Finance Management Act, 2015 was
produced by the Civil Society Budget Advocacy Group (CSBAG) with
support from the Democratic Governance Facility, and the USAID Uganda
and UKaid Governance and Accountability Participation Programme. The
contents of this publication are the responsibility of CSBAG and not of our
development partners.

© July 2016

Civil Society Budget Advocacy Group (CSBAG)

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Plot 11 Vubya Close, Ntinda Nakawa Rd
Fixed Line: +256-755-202-154
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All rights reserved. No part of this publication may be reproduced, or

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Table of
Contents

Foreword 2
INTRODUCTION 4
WHY THE PUBLIC FINANCE MANAGEMENT ACT, 2015? 5
WHAT IS THE ROLE OF PARLIAMENT IN PFMA, 2015? 7
MACROECONOMIC AND FISCAL POLICIES 12
BUDGETING PREPARATION, APPROVAL AND MANAGEMENT 14
CONTINGENCIES FUND 19
CASH AND ASSET MANAGEMENT 20
PUBLIC DEBT MANAGEMENT 21
ACCOUNTING AND AUDIT 22
PETROLEUM REVENUE MANAGEMENT 24
MISCELLANEOUS 25
REFERENCES 26

Figure 1: PURPOSE OF THE PFM ACT 2015 5

Figure 2: BUDGET REPORTING CYCLE 14
Figure 3: FINANCIAL REPORTING TIMELINES 23
Introduction
 The Public Finance Management Act,
(PFMA) 2015 (as amended), is aligned to the
Constitution of the Republic of Uganda and
Public Financial Management Reform Strategy
(2014/15 - 2017/18). The PFMA includes
robust planning, budgeting and accountability
processes that are intended to promote
stakeholder involvement and effective
service delivery taking into account recent
developments in oil sector.

The PFMA 2015 (as amended) addresses key
gaps identified in PFM legislation leading to a
repeal of the Public Finance and Accountability
Act 2003. Specifically, the new law strengthened
accountability and transparency in the
use of public resources through increased
Parliamentary oversight over the Executive,
restored credibility and predictability of the
national budget given a new financial reporting
calendar and alignment of budget preparation,
implementation and oversight, operationalised
the Contingencies Fund as per Article 157 of
the Constitution and regulated all government
revenues including Petroleum Revenue
Management.
As a result of pro-activeness of the Civil
Society Budget Advocacy Group (CSBAG)
to improve PFM and government’s efforts to
consult stakeholders on the development of
this omnibus law, CSBAG made contribution
into the PFMA 2015 (as amended) to advocate
for a people centered law that promotes
inclusive planning, equitable budgeting and
accountability.
Why the Guide
This simplified version of the Public Finance
Management Act 2015 provides an overview of
the Public Finance Management Act 2015 as
amended. It is intended to be used as a quick
reference guide for the Members of Parliament,
Civil Society Organisations and other
stakeholders to ease their applicability of the
law in the day to day conduct of public finance
monitoring and advocacy at both National and
Local Government Level.
The guide provides key highlights of the PFMA,
2015 as amended. It covers macroeconomic
and fiscal policies, budget preparation,
approval and management, contingencies
fund, cash and asset, public debt, grants and
guarantees, accounting and audit, petroleum
revenue management and miscellaneous parts
of the PFMA 2015 as amended. The detailed
requirements and implementation guide are set
out in Public Finance Management Regulations
2016, related guidelines and instructions.
The information in this guide is for general
information only and should not be treated or
relied on as a substitute for legal interpretation
of the PFMA 2015 (as amended) or its
application to particular circumstances or
entities.
Target Audience:
The simplified version of the Public Finance
Management Act 2015 is intended to be used
by Members of Parliament, Civil Society
Organisations and other stakeholders to
ease their applicability of the law in the day
to day conduct of public finance monitoring
and advocacy at both National and Local
Government Level.
 UShs
Why the
Public Finance
Management
Act, 2015?
A comprehensive and sound legal and regulatory
framework is a foundation of accountability systems
for public resources entrusted to Government to
administer on behalf of its citizens. Therefore, the
PFMA 2015, under Section 2 of the Act, provides for
public financial management in Uganda by establishing:

Figure 1:
PURPOSE OF
THE PFM ACT
2015
Table 1: KEY TERMS USED IN THE PFM ACT, 2015

Term Definition
Appropriation An authorization made under an Appropriation Act permitting payment out
of the Consolidated Fund or the Petroleum Fund under specified conditions
or for a specified purpose.
Appropriation in This refers to the category of expenditure that is non-tax and collected by
Aid institutions that spend at source.
Budget The Government Plan of Revenue and Expenditure for a financial year.
Consolidated The Consolidated Fund of Uganda established under Article 153 of the
Fund Constitution.
Classified The expenses and commitments incurred by an authorized agency for the
expenditure collection and dissemination of information related to national security
interests and include the cost of procurement and maintenance of related
assets.
Government Refers to the Central Government.
Government debt A financial claim on the Government that requires payment by Government,
of the principal, or the principal and the interest, to a creditor.
Inventories (a) Assets in the form of materials or supplies to be consumed in the
means production process,
(b) Assets in the form of materials or supplies to be consumed or
distributed in the rendering of services; and
(c) Assets held for sale or distribution in the ordinary course of operation.
Public (a) An authority established by an Act of Parliament other than a local
corporation government, which receives a contribution from public funds, or the
operations of which may, under the Act establishing it or any Act relating
to it, impose or create a liability upon public funds; and
(b) Any public body which in a financial year receives any income from
public funds.
Public debt Includes the interest on that debt, sinking fund payments in respect of that
debt and the costs, charges and expenses incidental to the management of
that debt.
Sector A group of institutions or votes that have common functions, objectives and
mandates.
Statutory Expenditure charged on the Consolidated Fund by the Constitution or
expenditure by an Act of Parliament, but does not include the expenditure of moneys
appropriated or granted by an Appropriation Act or a Supplementary
Appropriation Act.
Treasury An action report by the minister responsible for finance detailing the actions
memoranda taken on the recommendations of Parliament arising out of the report of the
Auditor General.
Virement The reallocation of funds within the budget of a vote, from a budget line to
another budget line.
Votes An entity for which an appropriation is made by an Appropriation Act or
Supplementary Appropriation Act.
What is
the role of
parliament in
PFMA, 2015?
Chapter nine of the Constitution under Articles
152, 153,154 and 159 requires Government
to seek authority by or under an Act of
Parliamentary to levy tax, receive or retain
revenue, borrow or spend public money. The
PFMA, 2015 is the prime legislative framework
for Parliamentary authorization and scrutiny
of Government’s revenue and expenditure
proposals and management of Government’s
assets and liabilities.

Government is required to effectively and

efficiently manage the public resources and
provide timely accountability to Parliament.
Below is a key highlight of the role of
Parliament outlined in the PFMA, 2015 as
amended.
Table 2: KEY HIGHLIGHTS OF THE ROLE OF PARLIAMENT AS STIPULATED IN THE PFM
ACT, 2015

Part Name Policy Objectives Role of Parliament PFMA, 2015

Reference
PART II Principles and Approve the Charter for Fiscal Sec.5(5)
Macroeconomic objectives to Responsibility and any deviations
and Fiscal guide government from its objectives
Policies spending Approve the Budget Framework Sec.9(8)
and revenue Paper by 1st February for each
mobilisation financial year
for economic
stabilization Analyze and make Sec. 12(1)
and long term recommendations where
sustainability of necessary in government policies
public finances and programmes affecting the
in a prudent economy
and transparent Ensure public resources are held Sec.12(2)
manner. and utilized in a transparent,
accountable, efficient, effective
and sustainable manner and in
accordance with the Charter and
Budget Framework Paper
PART III Procedures for Approve annual budget, work Sec.14(1)
Budget optimal resource plan of government for the
Preparation, allocation and next financial year and the
Approval and efficiency based Appropriation Bill and any other
Management on government bills that may be necessary to
policy and national implement the national budget by
31st May of each year
strategic objectives.
To enable the Consider a report on fiscal Sec.18(1)
budget to be performance
implemented as Authorise a reallocation of funds Sec.20
intended. from a vote
Authorise a vote to enter into a Sec.23 (2)
commitment of more than one
financial year as part of the Annual
Budget
Scrutinize classified expenditure 24 (2)
Approve Supplementary Sec.25(1)
Appropriation Bill (Refer to PFMA
Amendment Act) which is over
3% of the approved budget
Receive supplementary estimates Sec.25(2)
of amounts spent within 4 months
of spending (Refer to PFMA
Amendment Act)
PART IV Provides for Appropriate money to Sec.26
Contingencies financing responses Contingencies Fund up to 0.5 % of
Fund to natural disasters the total approved budget for that
that is in the public financial year
interest (Refer to PFMA Amendment
Act)
May Invalidate a withdrawal from Sec.26(13)
the Contingencies Fund where
Parliament determines that the
requirements of the law are not
complied with
Consider Auditor General’s report Sec.26(16)
on accounts of the Contingencies
Fund
PART V Prudent and Authorize votes, state enterprises Sec.29
Cash and Asset safe custody in or public corporation through
Management management an Act of Parliament to collect,
of Government receive or retain revenue
resources and Approve abandonment of claims Sec.35(1)
investments and write off of public money and
stores
Consider a report for losses Sec.35(5)
authorized by the Minister
PART VI Sustainable debt Approve loans raised by the Sec.36(5)
Public Debt, financing and Minister
Grants and comprehensive Approve authority to guarantee Sec.39 (4)
Guarantees capture of all loans & consider report on
finances of existing guarantees
government
Consider Minister’s report on Sec.42(2)
Government debt
Appropriate expenditure to be Sec.43(1)
incurred on donor funded projects
Consider Minister’s report on Sec.44(5)
grants received by Government or
a vote
PART VII Accountability and Hold Accounting Officers Sec.45(5)
Accounting and transparency in personally and accountable for
Audit the use of public the activities of a vote
resources Receive from the Minister the Sec.53
Treasury Memorandum within
6months from the date of
Parliament’s consideration of the
report of the Auditor General
PART VIII Prescribes Authorise by an Appropriation Sec.58
Petroleum framework Act any withdraws from the
Revenue for prudent Petroleum Fund
Management management of Appropriate money from 62 (1)
petroleum revenue the Petroleum Fund to the
Consolidated Fund and Petroleum
Revenue Investment Reserve
Consider Minister’s reports on Sec.61 (1) (a)
the Petroleum Fund on estimated & (b)
revenue and accounts by 30th
September
Semiannual (1st April) and annual
reports (31st December) of the
fund
Consider Minister’s policy Sec.65 (2)
guidance to Bank of Uganda
regarding Government’s
expectation on the performance
of the Petroleum Revenue
Investment Reserve including risk
and return
Approve the Annual Plan of the Sec.71(3)
Petroleum Revenue Investment
Reserve
Consider Minister’s Annual Sec.72(3)
report on the Petroleum Revenue
Investment Reserve
Consider Audit report on Sec.73(2)
Petroleum Fund and Petroleum
Revenue Investment Reserve
PART IX Miscellaneous Consider Certificate of financial Sec.76 (1)
implications issued by Minister to
accompany every Bill introduced
in Parliament,
Consider report on exemption of Sec.77 (1)
tax
Liability on failure to meet Sec.78-85
requirements, Offences and
Surcharges, Amendments,
Repeals, Transitional provisions
SCHEDULES Schedules 1 -6 Currency points, formats for the Sch.1-6
CFR& BFPs, terms and conditions
for raising loans, provisions for
submission of accounts & formula
for revenue sharing from royalties
among local governments
Table 3: REPORTS TO PARLIAMENT UNDER THE PFM ACT,2015

Part Name Policy Objectives Role of Parliament PFMA,

2015
Reference
PART II Principles and Approve the Charter for Fiscal Sec.5(5)
Macroeconomic objectives to Responsibility and any deviations
and Fiscal guide government from its objectives
Policies spending Approve the Budget Framework Sec.9(8)
and revenue Paper by 1st February for each
mobilisation financial year
for economic
stabilization Analyze and make Sec. 12(1)
and long term recommendations where
sustainability of necessary in government policies
public finances and programmes affecting the
in a prudent economy
and transparent Ensure public resources are held Sec.12(2)
manner. and utilized in a transparent,
accountable, efficient, effective
and sustainable manner and in
accordance with the Charter and
Budget Framework Paper
PART III Procedures for Approve annual budget, work Sec.14(1)
Budget optimal resource plan of government for the next
Preparation, allocation and financial year and the Appropriation
Approval and efficiency based Bill and any other bills that may
Management on government be necessary to implement the
policy and national national budget by 31st May of each
year
strategic objectives.
To enable the Consider a report on fiscal Sec.18(1)
budget to be performance
implemented as Authorise a reallocation of funds Sec.20
intended. from a vote
Authorise a vote to enter into a Sec.23 (2)
commitment of more than one
financial year as part of the Annual
Budget
Scrutinize classified expenditure 24 (2)
Approve Supplementary Sec.25(1)
Appropriation Bill (Refer to PFMA
Amendment Act) which is over 3%
of the approved budget
Receive supplementary estimates Sec.25(2)
of amounts spent within 4 months
of spending (Refer to PFMA
Amendment Act)
PART IV Provides for Appropriate money to Sec.26
Contingencies financing responses Contingencies Fund up to 0.5 % of
Fund to natural disasters the total approved budget for that
that is in the public financial year
interest (Refer to PFMA Amendment Act)
May Invalidate a withdrawal from Sec.26(13)
the Contingencies Fund where
Parliament determines that the
requirements of the law are not
complied with
Consider Auditor General’s report Sec.26(16)
on accounts of the Contingencies
Fund
PART V Prudent and Authorize votes, state enterprises Sec.29
Cash and Asset safe custody in or public corporation through an
Management management Act of Parliament to collect, receive
of Government or retain revenue
resources and Approve abandonment of claims Sec.35(1)
investments and write off of public money and
stores
Consider a report for losses Sec.35(5)
authorized by the Minister
PART VI Sustainable debt Approve loans raised by the Sec.36(5)
Public Debt, financing and Minister
Grants and comprehensive Approve authority to guarantee Sec.39 (4)
Guarantees capture of all loans & consider report on existing
finances of guarantees
government
Consider Minister’s report on Sec.42(2)
Government debt
Appropriate expenditure to be Sec.43(1)
incurred on donor funded projects
Consider Minister’s report on Sec.44(5)
grants received by Government or
a vote
PART VII Accountability and Hold Accounting Officers Sec.45(5)
Accounting and transparency in personally and accountable for the
Audit the use of public activities of a vote
resources Receive from the Minister the Sec.53
Treasury Memorandum within
6months from the date of
Parliament’s consideration of the
report of the Auditor General
PART VIII Prescribes Authorise by an Appropriation Act Sec.58
Petroleum framework any withdraws from the Petroleum
Revenue for prudent Fund
Management management of Appropriate money from 62 (1)
petroleum revenue the Petroleum Fund to the
Consolidated Fund and Petroleum
Revenue Investment Reserve
Consider Minister’s reports on Sec.61 (1)
the Petroleum Fund on estimated (a) & (b)
revenue and accounts by 30th
September
Semiannual (1st April) and annual
reports (31st December) of the
fund
Consider Minister’s policy guidance Sec.65 (2)
to Bank of Uganda regarding
Government’s expectation on the
performance of the Petroleum
Revenue Investment Reserve
including risk and return
Approve the Annual Plan of the Sec.71(3)
Petroleum Revenue Investment
Reserve
Consider Minister’s Annual Sec.72(3)
report on the Petroleum Revenue
Investment Reserve
Consider Audit report on Petroleum Sec.73(2)
Fund and Petroleum Revenue
Investment Reserve
PART IX Miscellaneous Consider Certificate of financial Sec.76 (1)
implications issued by Minister to
accompany every Bill introduced in
Parliament,
Consider report on exemption of Sec.77 (1)
tax
Liability on failure to meet Sec.78-85
requirements, Offences and
Surcharges, Amendments,
Repeals, Transitional provisions
SCHEDULES Schedules 1 -6 Currency points, formats for the Sch.1-6
CFR& BFPs, terms and conditions
for raising loans, provisions for
submission of accounts & formula
for revenue sharing from royalties
among local governments
Table 3: REPORTS TO PARLIAMENT UNDER THE PFM ACT,2015

REPORT DATES

The Minister Reports on Fiscal Performance to Parliament 28th February and 31st
(section 18) October

The Minister reports to Parliament the reasons for non-

By 1st April
utilization of grants to Local Governments (section 17(5))

The Minister reports to Parliament the performance of the

By 1st April
Multiyear commitments made (section 23(4)).

The Auditor General reports to Parliament on the accounts of

31st December
the Contingencies Fund (section 26(16))

The Minister reports to Parliament on abandonment of claims

By 30th September
and write off of public money and stores (section 35(5))
The Minister reports to Parliament on Management of
Government Debt, guaranteed loans and the other financial
1st April
liabilities of Government and analysis of associated risks
(section 42(2)) and (section 39(4))
The Minister report to Parliament on Grants received by
1st April
Government or received by Vote (section 44(5)).

A Person or Authority granted power to exempt the payment

By 30th Sept, 31st Dec,
or to vary any tax under an Act of Parliament shall make report
31st March and 30th June
to Parliament on exemption of Tax (section 77(1))

The Minister tables to Parliament the Estimated Petroleum

30th Sept
Revenue for the FY (section 61(1)(a))
The Minister tables to Parliament Semi-annual and Annual
reports on the performance of the Petroleum Fund (section 1st April and 31st Dec
61(1)(b))
The Minister tables to Parliament an annual plan and
performance report of the Petroleum Revenue Investment 1st April
Reserve (section 71(3)) and (section 72(3))
The Auditor General submits an audit report to Parliament on 30th June and 31st
the Petroleum Revenue Investment Reserve (section 73(2)) December
Within six months from
The Minister submits to Parliament a Treasury Memoranda the date of Parliament’s
(section 53(1)) consideration of AG
report
Mandate of key offices in Public Financial Management
The PFMA 2015 establishes clear lines of responsibility in the management of public
resources.
Macro
Economic and
Fiscal Policies
The Charter PRINCIPLES OF FISCAL RESPONSIBILITY
for fiscal Parliament must ensure that Government pursues its fiscal policy objectives
responsibility based on the following principles of responsible fiscal management;
provides a five a) Sufficiency in revenue mobilisation to finance Government programmes
year contract Government should raise enough revenue to meet its spending on services
between and infrastructure developments. The recurrent operational expenses
should be met from revenue generated from government operations.
Government and
citizens on the b) Maintenance of prudent and sustainable levels of public Debt
Public debt by definition includes the interest on that debt, sinking fund
management of payments in respect of that debt and the costs, charges and expenses
the economy incidental to the management of that debt.
Government should be able to maintain a stable or low Debt to Gross
Domestic Product ratio; this ratio compares what government owes to what
it produces indicating the country’s ability to pay back its debt.
The Minister to Ensure that Government borrowing is mainly for capital investments as
set measurable they generate future benefit or service for citizens rather than operational
expenses
fiscal objectives
for the fiscal c) Ensuring that the fiscal balance when calculated without petroleum
revenue is maintained at a sustainable level over the medium term
principles A Fiscal Balance occurs when Government total revenue (minus
(a) to (e) in borrowings) is more than Government total expenditure.
the CFR and Check that Total Revenue less borrowings less petroleum revenue less total
expenditure gives a positive balance over 5 years
Annual Budget
Framework d) Management of revenues from petroleum resources and other finite
Paper (Sec.4 natural resources for the benefit of current and future generations
Ensure appropriate share of petroleum revenue is allocated to finance the
(3)) Budget (current) as well as allocated to the Petroleum Revenue Investment
Reserve (future)

e) Management of fiscal risks in a prudent manner

Cabinet is Fiscal risks are factors outside government’s control that cause the fiscal
required to outturn to be different from the fiscal forecasts or projections. These may
arise from unforeseen developments/event such as real GDP growth,
adhere to these changes in inflation, commodity prices, exchange rates, interest rates
principles in and donor inflows or contingent liabilities from government obligations of
contractual, political or moral nature whose timing and amount is outside
performing government’s control. Such events may lead to a deviation from objectives
any function of the CRF and the Minister shall seek approval from Parliament as per
Section 7 of the PFMA, 2015
conferred on it.
(Sec.6) f) Consistency of the Medium Term Expenditure Framework to the National
Development Plan
Check for demonstrated consistency between the Budget, MTEF and NDP
in terms of policy and strategic objectives

g) Efficiency, effectiveness and value for money in expenditure

Government expenditure must translate inputs into quality outputs in a
timely and cost effective manner
Development of the Fiscal Strategy
Fiscal policy is how the actions of government for spending and taxation impact on the economy
and aggregate demand. As part of fiscal responsibility, Parliament ensures that Government makes
credible and prudent decisions about its spending and taxation in a transparent manner. The PFMA
2015(as amended) therefore requires the Minister responsible for finance to submit to Parliament a
Charter for Fiscal Responsibility not later than three months after the first sitting of Parliament after a
general election. Government is also expected to provide regular macroeconomic and fiscal updates
to Parliament.
Budgeting
Preparation,
Approval and
Management
 Appropriation
Parliament is the It provides legal authority to
supreme law- government to spend public resources
through an Appropriation. It is therefore
making authority
unlawful to spend government money
that scrutinizes unless authorized through appropriation
and controls by an Act of Parliament or statutory
government expenditure.
activity The PFMA, 2015 requires appropriation
of ALL government resources including
donor funds (loans & grants) and
Petroleum Fund.

The Appropriation limit expires by 30th

June.

Sec. 17 of the PFMA, 2015

Budgeting and Reporting Cycle
The key stages in the budgeting and reporting cycle include:

Table 4: STEPS IN THE BUDGET ENACTMENT/APPROVAL STAGE (PFMA 2015)

Requirements (PFMA 2015) Timelines

st
Submission of National Budget Framework Paper (NBFP) Parliament By 31 December
[Section 9 (5)]
st
Approval of the National Budget Framework Paper by Parliament [Section By 1 February
9 (8)]
th
Presentation of the Ministerial Policy Statements to Parliament [Section 13 By 15 March
(13)]
st
Presentation of the Annual Budget and Tax Bills to Parliament [(Section 13 By 1 April
(3)]
st
Approval of Annual Budget [Section 14 (1)] By 31 May
st
Budget comes into operation [Section 13 (5)] 1 July
Budget Documentation
The PFMA 2015 (as amended) specifies key documents that are to be presented by the Minister to
Parliament at the time the Budget is presented. These include the following:
National Budget Framework
Paper:
• Prepared in consultation with
stakeholders
• Taking into consideration
balanced development, gender
and equity responsiveness
• Shall be consistent with the
Charter of Fiscal responsibility
• Shall be in a format prescribed
under schedule 3
• Shall be reviewed and approved
by Parliament
Ministerial Policy Statement:
• Achievements of the vote for the
previous financial year
• Annual and three months’
work plans and outcomes,
objectives, outputs, targets and
performance indicators
• Annual procurement and
recruitment plans of the
vote- ensure accuracy and
completeness
• Statement of actions taken
by the vote on Parliaments
recommendation of Auditor
General’s reports
• The cash flow projections of the
vote in line with the work plans
• Certificate issued by Minister
responsible for Finance
in consultation with Equal
Opportunities Commission
on gender and equity
responsiveness
• Vehicle utilization report
• Asset register of the vote
National Annual Budget:
• Section 13(6) of the PFMA requires that the Annual
Budget shall be consistent with the NDP, the Charter
for Fiscal Responsibility (CFR) and the Budget
Framework Paper (BFP).
• Section 13 (6) of PFMA, Section 13(7) requires a
Certificate of Compliance for the Annual Budget of
the previous financial year to accompany the Annual
Budget for next financial year issued by the NPA.
Therefore, ensure that the annual budget is
accompanied by a certificate of compliance of the annual
budget of the previous financial year issued by the
National Planning Authority
Check that the annual budget includes:
• Financing estimates for the financial year
including:
• Financing to be transfered from the Petroleum
Fund to the Consolidated Fund
• Plans for domestic and external financing
• Plans for government debt, guarantees to be
issued and divestment of government assets
• money recovered as a result of the
recommendations of the Auditor General’s
report
• a plan for divestment of government assets
• Expenditure estimates –preceding, current &
proceeding FY
• Multi-year commitments to be made in the FY
• Tax expenditures of Government
• Budgets of self-accounting departments,
commissions and organization set up under the
Constitution
• Grants to Local Governments and any subventions
for the FY
The Minister shall also present with the Annual
budget the following:
• Appropriation Bill,
• Treasury Memorandum,
• Statement attesting to reliability and completeness,
• List of appointed or designated AOs,
• Certificate of Gender and equity responsiveness and
• Budgets of public corporations and state enterprises
PARLIAMENT TO ANALYSE POLICY ISSUES
Sec 12 of the PFMA 2015 provides for Parliament to analyse policies and programmes that affect
the economy and where possible make recommendations on alternative approaches to policy or
programme.

BUDGETS FOR PUBLIC CORPORATIONS AND STATE

ENTERPRISES
Section 13 (11)(f) of the Public Finance Management Act, 2015 requires the Minister responsible for
Finance to lay before Parliament the budgets for Public Corporations and State Enterprises at the time
of laying the Annual Budget as per section 13(3).

APPROVAL AND SCRUTINY OF THE BUDGET

The PFMA 2015 (as amended) advances the budget preparation process so that the national budget is
presented to Parliament by 1st April (Sec.13 (3)) and approved by 31st May (Sec. 14(1)). This provides
Parliament with sufficient time to scrutinize the budget and have the budget effective by 1st July in line
with good budgeting practice.

THE ROLE OF THE BUDGET COMMITTEE

Under Sec.9 (7) and Sec. 13 (4) the Speaker commits the National Budget Framework paper and
the proposed annual budget to the relevant Budget Committee of Parliament and to each sectoral
Committee of Parliament for scrutiny of the part of the annual budget that falls within the jurisdiction
of that sectoral committee.

Parliament scrutinizes the Executive’s spending proposals by way of debate and sectoral committee
scrutiny in accordance with the rules of procedures.

The Constitution under Article 154(4) and Sec 14 (3) of the PFMA 2015 provides for the President to
authorize issuance from the Consolidated Fund where the Appropriation Act will not or has not come
into operation by the start of the financial year. This is referred to as a vote on account and runs for four
months from the beginning of the financial year.

However the PFMA 2015 (as amended), brought forward the process for appropriation and approval of
the budget prior to the beginning of the financial year, so the vote on account is no longer used though
it remains a Constitutional provision.

COMMITMENT AND EXPIRY OF APPROPRIATION

Commitment Control: The Act, under Sec.15, provides for expenditure control mechanism
by requiring any cash release for settling a commitment of Government to be made based on a
programmed Annual Cash flow plan issued by the Secretary to the Treasury. This plan is based on
the procurement, work and recruitment plans approved by Parliament. This was intended to avoid
accumulation of domestic arrears.

Expiry of appropriation: Under Sec. 17 of the PFMA, 2015, any appropriation by Parliament shall
expire by 30th June and cease to have any effect at the close of the financial year for which it is made.
Therefore, any funds not spent at year end are required to be repaid to the Consolidated Fund by close
of the financial year.

Any appropriation by a Local Council shall also be returned to the Council to be authorised as a
supplementary appropriation for the next year’s budget. The Accounting Officer of a local Government
is required to explain to the Minister responsible for finance in writing, when they fail to utilize at least
60% of the unconditional or equalization grant by 31st July of the following financial years (Sec 17(4)).
Budget execution: Under Sec. 21, of the PFMA, 2015, an Accounting Officer is required to implement
activities of the budget in accordance with the approved policy statement and within the cash projections
as issued by the Secretary to the Treasury. For effective monitoring of budget implementation, an
Accounting Officer shall submit a budget execution report to the Secretary to the Treasury every three
months of the financial year.

Multi-year expenditure commitments: Under Sec. 23 of the PFMA, 2015, any contract, transaction
or agreement that binds Government to a future financial obligation of more than one financial year
must be authorized by Parliament and a report made by the Minister on the performance of that
commitment.

REPORTING ON FISCAL PERFORMANCE

As part of monitoring implementation of the Annual budget in line with the Charter for fiscal
responsibility, the Minister is required to make reports on key fiscal performance parameters under
Sec. 18 of PFMA, 2015.

Ensure that fiscal performance reports made

to Parliament by end of February and October
include:
• The current and projected state of the
economy
• The performance of Government against
the fiscal objectives of the CRF
• The financial and non-financial
performance of the annual budget
• The Contingencies Fund
• Virements made
• Performance of the petroleum fund
• Donations made to a vote

In addition, Sec 19 requires the Minister to publish pre and post election economic and fiscal
updates detailing all the election related spending accompanied by a statement signed by the Secretary
to the Treasury policy decisions made by government and other circumstances with implications on
the contents of the economic and fiscal updates.

Reallocation and Virements

Parliament may authorise by resolution, any reallocation of funds from one vote to another in
circumstances only where the functions of a vote are transferred to that other vote (Sec.20).

The Act allows the Minister to reallocate funds from one budget item or Activity to another within the
appropriated budget of a vote but caps this at 10% variation (Sec 22).

Classified Expenditure
In accordance with Sec 24 of the PFMA 215, Classified Expenditure budget shall be scrutinised in a
closed session by three member committees of Parliament which include: chairperson of the committee
responsible for budget, the chairperson of the committee responsible for defence and internal affairs
and another member appointed by the Speaker.
Supplementary Expenditure
The PFM Amendment Act 2015 under Sec.25 limits additional resources over and above what is
approved by Parliament. The Minister responsible for finance may, upon request by an Accounting
Officer, approve a supplementary expenditure of up to 3% of the total approved budget for that financial
year. The Minister must lay before Parliament the supplementary estimates within four months after
the money is spent. Any supplementary expenditure above 3% should be authorised by Parliament.

A supplementary expenditure is an
expenditure which cannot be funded
through virements, it cannot be postponed
to the next financial year and it was not
foreseen by the vote at the time of budget
preparation or should have been included
in the budget of the vote.
Contingencies
Fund
 Government may, in public interest, need
to respond quickly when there is a natural
disaster and no resources are available from
the annual budget or other sources to finance
responses to the natural disaster. Part IV of
the PFMA 2015 gives effect to Article 157 of the
Constitution by establishing a Contingencies
Fund. An amount equivalent to 0.5% of
appropriated annual budget of the previous
financial year shall be used to provide financing
respond to natural disasters.

A natural disaster is an event that causes severe human suffering or material, economic or
environmental damage and which results in or is likely to result in the loss of essential services
required to meet basic human needs.

CASH AND ASSET MANAGEMENT

Revenue Collection and retention: The PFMA 2015 under Section 29 provides Parliamentary
oversight over all public resources by requiring authorization through an Act of Parliament for a vote,
state enterprise or public corporation to collect or receive revenue. All government entities including
those that internally generate revenue are required to submit their budget estimates to Parliament for
appropriation. Any retention of any revenues shall be appropriated by Parliament in accordance with
Sec.29 (3) of the PFMA, 2015.

Consolidated Fund: In order to ensure safe custody and control over the cash resources of
Government, all revenue collected or money raised or received for the purpose of Government shall
form part of the Consolidated Fund or public fund established for that special purpose by an Act of
Parliament.

Bank Account Management: The PFMA 2015, under Section 33, centralizes management of
bank accounts within Treasury. The Secretary to the Treasury is required to prescribe the framework
for banking and cash management. A written authorization of the Accountant General is required for
opening of any bank account to receive or spend public money at both Local and Central government.

Asset Management: Accounting Officers are responsible for asset and inventory management
of the vote. The Act provides Parliamentary oversight by requiring permission of Parliament for any
pledge or encumbering of the land or any other asset of a vote.

Any abandonment of claims and write off of public money and stores requires the
Minister, under Sec 35, to seek approval of Parliament by resolution specifying the amount authorized
to be written off or abandoned. However, the Minister is given a limit of up to ten million shillings and
any sums written off or abandoned included in a Supplementary Appropriation Bill.
Public Debt
Management
 Government is tasked to maintain
prudent levels of debt in a sustainable
manner. This is a potential area of
fiscal risk that must be controlled and
managed by Government. Parliament
plays a critical role in oversight over
public debt management.

Subject to the The Minister is required to seek Parliamentary

Constitution under
Article 159, the authority
to raise money by loan
and issue guarantee
for and on behalf of the
Government is solely
vested in the Minister
and no other person,
public corporation,
state enterprise or local
government council take
any action resulting into a
liability being incurred by
Government.
Sec 36 of the PFMA, 2015
Article 195 provides
that Local Government
borrowing is subject to
approval by Government
approval for
• Loans (Sec 36):
• To finance a budget deficit or shortfall
• To obtain foreign currency
• For on-lending to an approved institutions
• Any repayment, conversion and
consolidation of loans.(Sec.37)
• Guarantee the repayment of the principal
money, interest and other charges on the
loan (Sec.39)
The Minister is required to prepare and submit
a detailed report on public debt management to
Parliament by 1st April (Sec.42)
The Minster may also raise loans for the
management of monetary policy and treasury
operations (PFM Amendment Act S.4) and for
defraying an expenditure which may lawfully be
defrayed or treasury operations (Sec.36 (2)(b)
(e))
The PFM Amendment Act, 2015, under 36 (5a) of the Principal Act, caps the borrowing for treasury
operations to 10% of the domestic revenue of Government for the financial year. It requires automatic
repayment of the loan from Uganda Revenue Authority collections account held at Bank of Uganda ,
within the financial year.

Treasury operations are the day to

day management of the cash needs of
Government , by undertaking annual,
quarterly and daily cash forecasts for
ensuring through investments and temporary
borrowing, that Government has sufficient
liquidity to meet its obligations on time in line
with the Parliamentary appropriations.

Monetary Policy is the actions of a Central

bank to influence the demand and supply of
money to create economic growth through
interest rates and other monetary tools

Treasury operations are the day to day management of the cash needs of Government , by undertaking
annual, quarterly and daily cash forecasts for ensuring through investments and temporary borrowing,
that Government has sufficient liquidity to meet its obligations on time in line with the Parliamentary
appropriations.

Monetary Policy is the actions of a Central bank to influence the demand and supply of money to
create economic growth through interest rates and other monetary tools

Management of projects funded by Loans and Grants: The Act under Sec.43 provides
for comprehensiveness in budget information to capture projects funded by loans and grants. All
expenditure to be incurred by Government on externally financed projects in a financial year is required
to be appropriated by Parliament.

The Minister is authorized under Sec.44 to receive monetary grants made to Government or a vote
by a foreign government, international organisation or any other person and the funds received shall
be paid into the Consolidated fund. The Minster is required to table before Parliament a report of the
grants received every financial year.
Accounting
and Audit
Government is accountable to Parliament for the use of public resources
and the exercise of powers conferred by Parliament. As part of its
accountability requirements, Parliament seeks independent assurance
that Accounting Officers are operating, and accounting for their
performance, in accordance with Parliament’s intentions. In pursuit of
the above policy objective, Government is required to produce half year
and annual consolidated financial statements.
These financial statements provide information on the Government’s assets and liabilities, revenue and
expenses and cash flows. The Auditor-General is responsible for expressing an independent opinion on
the annual financial statements of the Government thereby giving assurance to government’s activity.

The PFM Act under Part VII provides the key function and responsibility for Accounting Officers
(Sec.45) and Accountant General (Sec 46) in the public financial management.

Sec 45(5) provides that an Accounting Officer shall be responsible and personally accountable to
Parliament.

Section 47 of the Act establishes the position of the Internal Auditor General and strengthens its
independence with direct reporting to the Secretary to Treasury.

The Act establishes an Audit Committee for each sector of Government and for a number of votes
in Local Government under Sec.49. The audit committees assist Accounting Officers to oversee the
effectiveness and efficiency of internal controls within a vote.

The Act requires full reporting on performance of entire Government. Entities are required to prepare
both half year and annual financial statements. Consolidated Accounts of government include Central
Government, Local Governments, public corporations, Contingencies Fund and Petroleum Fund.
(Sec.52)
Figure 3: FINANCIAL REPORTING TIMELINES

The Act introduced in-year reporting as a statutory requirement under Section 50, which was
previously administrative. Accounting Officers are therefore required to submit half year accounts to
the Accountant General by 15th February. The Accountant General consolidates the accounts from
votes and makes a submission to Secretary to Treasury by 15th March. (Sec. 50(3))

Accounting Officers of a vote including Local Government are required to submit Annual Accounts
within two months after the end of the financial year to the Auditor General to conduct an audit and
to the Accountant General for consolidation. Accounting Officers of a public corporation are required
to submit a summary statement of financial performance of Public Corporations to the Accountant
General and Secretary to the Treasury within 2 months after year end. (Sec 51)

The annual financial statements includes a statement on actions taken by the vote on the
recommendations of Parliament on the report of the Auditor General

Treasury memorandum: Accounting officers of Central and Local Government votes are required
to submit, together with their Ministerial statements and financial statements, updates on actions
taken on Parliamentary recommendations on the report of the Auditor General. (Sec 53) This process
completes the accountability cycle of Government.
Petroleum
Revenue
Management
The PFMA 2015 establishes the Petroleum Fund
under Section 56 to:
a) Receive all petroleum revenue accruing
to Government
b) Finance the National Budget (UCF)
c) Finance investment for the benefit of
current and future generations
Uganda Revenue Authority shall be responsible
for collection and receipt of all Petroleum revenue
due to Government as provided under Sec.57.
The Act encourages timely payment of revenues
due to Government. Any default of payment
attracts a penalty of 7% of the amount in default
for each day of default.
Withdrawals from the Petroleum Fund shall only
be by Appropriation and Warrant issued by
Auditor General as provided under Sec 58.
The Accountant General is required to
prepare accounts for the Petroleum Fund and
submit semi-annual financial statements by 15th
February and annual financial statements by 31st
August to the Minister, Secretary to the Treasury
and the Auditor General. (Sec.60)
The Minister is responsible for the Petroleum
Fund and an Investment Advisory Committee
is established to tender technical advice to
the Minister. The Minister shall report to
Parliament:
a) Petroleum Revenue estimates by 30th
September to facilitate the next budget
cycle (Sec 61(1)(a))
b) Semi-annual and annual reports by 1st
April and 31st December (Sec 61 (1)(b) &
Sec 71(3))
c) Qualifying Instruments issued for
investment of Petroleum Revenue (Sec
63(3))
SHARING OF REVENUE FROM
ROYALTIES
Sec 75 of the PFMA 2015 provides for sharing of
petroleum revenues as follows:
• Central Government shall retain 94%
of revenue from royalties out of which
one (1) percentage point is be shared by
gazetted cultural institutions (where oil is
located).
• 6 % to be shared amongst Local
Governments within petroleum
exploration and production areas.
• 50% of all loyalties due to Local
Governments to be allocated to only oil
producing districts
• The other 50% to be shared amongst all
Local Governments based on population
size, geographical area, and terrain.
• Royalties will be appropriated to
beneficiary districts as unconditional
grants as part of the annual budget.
Royalty allocations shall be part of revenue of the
district and shall be utilised for the development
of the local government in question.
Bank of Uganda shall be responsible for
managing the Petroleum Revenue Investment
Reserve as provided under Sec 64 in accordance
with the principles of portfolio management
and petroleum investment policy issued by the
Minister responsible for finance in consultation
with the Secretary to the Treasury and on advice
of the Investment Advisory Committee.
Bank of Uganda is required to prepare accounts
of the Petroleum Revenue Investment Reserve
and submit semi-annual financial statements by
15th February and annual financial statements by
31st August to the Minister copying the Auditor
General, Secretary to the Treasury, Accountant
General. (Sec.69)
The Auditor General is required to provide
independent assurance to the management of
the Petroleum Fund and Petroleum Revenue
Investment Reserve in accordance with the
National Audit Act, 2008. The Audit General is
required to submit audit reports to Parliament by
30th June for the semi-annual accounts and 31st
December for the annual accounts.
Miscellaneous
Under Sec 76, Every Bill introduced in Parliament shall be accompanied by
a Certificate of financial implications issued by the Minister indicating
the impact of the Bill on the economy.
Report on exemption of Tax: Under Sec 77, any person or an authority granted power
to exempt the payment or to vary any tax under an Act of parliament shall every financial year make a
report to Parliament

Liability on failure to meet requirements

Under Sec 78, Parliament may request the Minister responsible for the insititution to make a report
where the insititution has not met the requirements of this Act.

Offences
Sec 79 provides for punitive measures against a person who commits an offence and shall be liable
on conviction too a fine not exceeding five hundred currency points or a term of imprisonement not
exceeding four years or both. This law therefore bites when enforced by those responsible including
Parliament.

Regulations
It is importnat that the law is read together with the PFM Regulations 2016 as provided for under Sec.
81. The regulations have been issued by the Minister effective 29th April 2016.
References
1. The Constitution of the Republic of Uganda
1995 as amended.
2. The Public Finance Management Act, 2015
3. The Public Finance Management Amended
Act, 2015