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Ramathan Ggoobi, the Permanent Secretary at the Ministry of Finance
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The Ministry of Finance has directed all accounting officers to submit a list of all beneficiaries of the sh200b released to clear arrears. Ramathan Ggoobi, the Permanent Secretary at the Ministry of Finance and Secretary to the Treasury, said the accounting officers should submit the lists of verified beneficiaries by category for reconciliation of released funds by October 15, 2024. In a budget execution circular dated July 15, 2024, Ggoobi stated that with the release of sh200b, all accounting officers should prioritize the payment of arrears in the first quarter on the 'first in, first out' (FIFO) basis from the verified suppliers captured in the Integrated Financial Management System (IFMS) arrears database.
“All accounting officers are mandated to submit the draft final accounts by August 31, 2024, to the Accountant General with duly signed certificates of outstanding commitments. Copies should be submitted to the Internal Auditor General. Please note that draft final accounts submitted without certificates of outstanding commitments will be rejected,” Ggoobi said. By June 2023, domestic arrears amounted to over sh5.9 trillion.
In a report to Parliament for the year ended June 2023, the Auditor General noted that some accounting officers were concealing domestic arrears and paying for arrears which were previously not disclosed nor budgeted for. The Auditor General said despite the commitment control system, the trend of domestic arrears has continued to escalate at an average of 16% in the last five years despite several interventions by the Treasury.
The report recommended that the Permanent Secretary of the Ministry of Finance should rethink the current control measures being applied and ensure that the payment of domestic arrears is managed strategically to reduce the risk of increased government debt. Ggoobi blamed the continued increase in the stock of domestic arrears on non-adherence to the commitment control system.
Ggoobi noted that over time, some votes were still accruing utility arrears despite the implementation of prepaid billing systems. He urged all accounting officers to settle any outstanding utilities with the respective service providers by the end of the first quarter of the financial year 2024/25 (July-September). He directed the accounting officers to promptly pay utility and rent bills throughout the financial year to avoid accumulating new arrears.
Ggoobi also noted that some votes either under-budget for or completely do not plan for information communication and technology (ICT) services provided by the National Information Technology Authority-Uganda (NITA-U) despite the fact that these are consumed on a daily basis and are critical for the smooth operation of votes and execution of their mandates. According to Ggoobi, as a result, the government has outstanding obligations for ICT services amounting to sh41b as of June 30, 2023.
On the payment of taxes and other statutory deductions by the government, Ggoobi said some accounting officers neglect to remit tax and social security deductions to the Uganda Revenue Authority (URA) and the National Social Security Fund (NSSF), resulting in the accumulation of arrears. “This practice must cease immediately. Accounting officers should therefore ensure that all payments for goods and services encompass taxes. All tax deductions should be remitted to URA to prevent the accumulation of arrears. Pay As You Earn (PAYE) should be remitted against chart of accounts item,” he said.
He instructed accounting officers to remit Local Service Tax (LST) to local councils of their employees' residences in line with Section 9 of the Local Governments Act, 2017, and not to local councils where their employees' workplaces are located. He said accounting officers should create a database of employees' residences and update them regularly before the start of every new financial year, mobilize lower local council authorities to keep an updated register of their residents for reconciliation purposes with remittances received, and initiate application for supplier details on the IFMS system for each of the local service tax remitting entities to facilitate receipts of tax collections.
On the collection of non-tax revenue (NTR), Ggoobi directed all accounting officers to remit all NTR to the Consolidated Fund account in line with Section 29 of the Public Finance Management (PFM) Act, 2015.
“All accounting officers are hereby reminded to strictly comply with this provision of the PFM Act 2015. Any attempt to collect and utilize NTR at its source will result in appropriate penalties being imposed,” he said.
