Special Audit Clears Finance Officials on PTA Loan Scandal Top story

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In short
The audit undertaken by the Auditor General followed a parliament directive that sought to ascertain the performance and use of the loan. Parliament had earlier on faulted Finance Minister Matia Kasaija together with the Secretary to the Treasury Keith Muhakanizi for misleading Parliament and obtaining the loan through false pretence.

A special Audit into a controversial USD 200 Million loan acquired from The Eastern and Southern African Trade and Development Bank (PTA) has established that the funds were used for the rightful purpose.

The audit undertaken by the Auditor General followed a parliament directive that sought to ascertain the performance and use of the loan.  Parliament had earlier on faulted Finance Minister Matia Kasaija together with the Secretary to the Treasury Keith Muhakanizi for misleading Parliament and obtaining the loan through false pretence.

The controversy stemmed from a 2016 loan application which sought to, among others, finance a shortfall in the domestic revenue which at that time was projected at 288 billion Shillings, substitute domestic borrowings amounting to 280 billion Shillings, finance the supplementary expenditure worth 156 billion Shillings and to finance expenditure pressures resulting from the exchange rate depreciation experienced during the 2015/16 financial year.

But Parliament rejected the loan application on condition that the objective of borrowing to stabilize the Shilling was unjustified. The same loan application had reportedly been rejected by the Central Bank Governor Emmanuel Tumusiime Mutebile, who advised that the country had sufficient foreign exchange reserves to support the needed interventions.

It is reported that after the loan application was rejected by Parliament on January 7, 2016, the Ministry of Finance amended the objective of the loan to indicate that money was urgently needed to procure medical supplies for the country. It was subsequently approved three months later.

But National Medical Stores-NMS lodged a complaint months later indicating that it had failed to secure 156 billion Shillings, which was needed to procure medicines. As a result, parliament tasked the Finance ministry officials to explain what the money was used for.

But the audit report from the Auditor General now indicates that National Medical Stores (NMS) was actually given the money. In the report, Auditor General John Muwanga says that by February 2018 (FY2017/2018), NMS had received the bulk of its appropriated budget.

"Out of the USD 42, 88O, 625.09 worth of framework contracts submitted in support of the drawdown request, NMS had placed and executed orders amounting to USD 24,468,897.22 which were paid in the financial year 2016/2017 and are still being settled in 2017/2018 through their appropriated budgets as the contracts perform."

The report also notes that approved budget and releases to NMS indicated that the entity received all entire budgets of 218 billion Shillings in the financial year 2015/16 and 264 billion Shillings in the financial year 2016/17. By February 2018 (financial year 2017/2018), NMS had so far received 269 billion Shillings out of the approved budget of 258 billion Shillings.

Muwanga adds that to enable NMS to finance its budget shortfall, the entity requested for a supplementary funding totalling to 68 billion Shillings in the financial year 2015/2016 and 2016/2017 to facilitate procurement of blood collection and testing as well as malaria drugs.

Muwanga observed that Finance ministry availed NMS with the supplementary funding of 27 billion Shillings in the financial year March 2017 and 41 billion Shillings in the financial year 2017/2018.

 

About the author

Alex Otto
“Journalism that changes lives is my goal,” Alex Otto has said on more than one occasion. That is his career’s guiding principle. Has been since he was a radio journalist in the northern Ugandan town of Gulu in 2009.

Otto passionately believes his journalism should bring to the fore the voices of the voiceless like the shooting victims of Apaa. Otto tries in his journalism to ask tough questions to those in positions of authority.

Based in the Kampala bureau, Otto is especially interested in covering agriculture, politics, education, human rights, crime, environment and business. He has reported intensively on the post-conflict situation in northern Uganda.

A URN staff member since 2014, Otto previously worked with The Observer Newspaper from 2012 to 2013 and later the Institute for War and Peace Reporting IWPR based in Gulu.

He was the URN Gulu bureau chief 2014-2016.