CSO CALL FOR TRANSPARENCY AND ACCOUNTABILITY OF THE USD 1 BILLION INTEREST-FREE EXTENDED CREDIT FACILITY TO UGANDA

Greetings from the Civil Society fraternity in Uganda.

We welcome the International Monetary Fund (IMF) support extended to Uganda and other developing countries to respond to the COVID-19 pandemic. This move by the IMF is commendable given the health and economic challenges that Uganda is facing amidst these unprecedented times.

In June 2021, the IMF Board approved about USD 1billion interest free Extended Credit Facility to Uganda for three years, which will support Uganda better Uganda’s short-term response to COVID-19 crisis and help sustain a post-crisis inclusive recovery. This support comes after the IMF Board approving USD 498.2 Million interest-free Rapid Credit Facility in 2020 to help finance health, social protection, and macroeconomic stabilization measures.

We welcome this financial support, considering the contracted domestic revenue generation potential, as the Uganda Revenue Authority reported that it failed to collect UGX 2,606.84 billion in 5 months due to COVID 19. However, we are concerned that whereas Uganda, just like all recipients of the Rapid Credit Facility committed to foster transparency and accountability for these resources and Government of Uganda in its Letter of Intent to IMF committed to adhere to the best fiscal management practices to minimize wastage and misuse of these funds, this commitment was not adhered to. On the contrary, the Thematic Audit Report on COVID 19 pandemic Government Interventions (February 2021) by the OAG report reveals that utilization of the USD 498.2 Million Rapid Credit Facility was marred with several irregularities which undermine the principles of prudent public finance management. For instance, this report reveals that Public Procurement guidelines were flawed, and as result, UGX 143.83 billion as misappropriated.

Furthermore, whereas the Government of Uganda, in its letter of intent, committed to provide a separate report for the utilization of the funds Uganda Development Bank received, we are concerned about the lack of transparency on the beneficiaries that received funds through this credit facility. Therefore, this means that the post-crisis inclusive recovery objective of the current loan may not be tenable under such irregularities.

We commend the IMF’s stand on ensuring transparency and accountability in pandemic-related spending so that these funds serve the intended purpose. We, however, have the following asks, which, if implemented, would go a long way in ensuring that Uganda applies the best fiscal management practices to minimize wastage and misuse of these funds:

Our asks

1. As committed, IMF needs to improve monitoring of the implementation of policy commitments made by Uganda on the emergency loan, including measures to ensure that disbursements of emergency lending are not wasted.
2. IMF to provide feedback on how the Uganda Government utilized the loan worth USD 498.2 million extended to Uganda in 2020 during the first wave of COVID-19.
3. IMF to task the Government to establish clear fund utilization guidelines which are easily accessible to citizens to enable them to monitor such spending to ensure transparency and accountability for the resources.
4. The IMF loans should not be used to meet recurrent Government expenses such as salaries, purchase of vehicles, creation of administrative units and others.
5. All public procurements related to the IMF loan funds should be displayed in a timely manner on the Government procurement portal for transparency and executed in line with the Public Procurement and Disposal of Assets Authorities law (PPDA).
6. There should be a timely release of COVID – 19 fund utilization reports with specific reporting timelines. (e.g., quarterly, or biannual reporting is highly recommended).
7. The COVID-19 fund reports should provide details on the physical and financial performance to show Value for Money.
8. The COVID-19 fund utilization report should be published and must have a list of individuals and companies involved in any mismanaging of the funds.
9. The Fund must task Government to establish a mechanism of recovering any lost monies. All accounting officers and companies implicated in the misuse of the first COVID funds should be dealt with in accordance with Section 79 (2) of the Public Finance Management Act (PFMA, 2015).
10. We equally beseech the Fund to advise the Government on the sustainable management of borrowed funds, given that Uganda’s public debt to GDP ratio is above the 50 per cent threshold.

We pledge to continue advocating for transparency and Accountability from the government in relation to public expenditures in a bid to realize inclusive and sustainable development processes.

We will continue seeking a platform between the Fund and the Civil Society to share experiences of fund management during the first COVID-19 wave in 2020 and the opportunities to handle this fund better during this second wave of COVID-19.

This statement has been written and agreed upon by:

1. Civil Society Budget Advocacy Group (CSBAG)
2. Oxfam in Uganda
3. Centre for Health, Human Rights and Development (CEHURD)
4. Southern and Eastern Africa Trade and Negotiations Information Institute (SEATINI)
5. Centre for Constitutional Governance (CCG)