the republic of uganda - oag … · it is expected that the harmonization of debt and cash...

MANAGEMENT OF PUBLIC DEBT BY THE MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT

V A L U E F O R M O N E Y A U D I T R E P O R TM A R C H 2 0 1 5

MANAGEMENT OF PUBLIC DEBT BY MINISTRY OF FINANCE, PLANNING AND

ECONOMIC DEVELOPMENT

T H E R E P U B L I C O F U G A N D A

OFFICE OF THE AUDITOR GENERAL


T H E R E P U B L I C O F U G A N D A

V A L U E F O R M O N E Y A U D I T R E P O R TM A R C H 2 0 1 5

MANAGEMENT OF PUBLIC DEBT BY MINISTRY OF FINANCE, PLANNING AND

ECONOMIC DEVELOPMENT

AUDITOR GENERAL’S MESSAGE

AUDITOR GENERAL’S MESSAGE

31st March 2015

The Rt. Hon. Speaker of ParliamentParliament of UgandaKampala

REPORT OF THE AUDITOR GENERAL ON THE MANAGEMENT OF PUBLIC DEBT BY THE MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT

In accordance with Article 163 (3) of the Constitution, I hereby submit my report on the audit undertaken on the acquisition process of public debt by Ministry of Finance Planning and Economic Development (MoFPED).

My office intends to carry out a follow up at an appropriate time regarding actions taken in relation to the recommendations in this report.

I would like to thank my staff who undertook this audit, the consultants from the National Audit Office of the United Kingdom (NAO-UK) for the technical support provided, the staff of the Ministry of Finance, Planning and Economic Development and Bank of Uganda (BoU) for the assistance offered to my staff during the period of the audit.

John F. S. MuwangaAUDITOR GENERAL

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T

M A R C H 2 0 1 5MANAGEMENT OF PUBLIC DEBT BY THE MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT

LIST OF TABLES AND FIGURES ......................................................................................................... i

LIST OF ABBREVIATIONS AND ACRONYMS ..................................................................................... ii

EXECUTIVE SUMMARY ...................................................................................................................... iii

CHAPTER ONE ............................................................................................................................. 1

INTRODUCTION .................................................................................................................................. 2

1.1 BACKGROUND ..................................................................................................................... 2

1.2 MOTIVATION ......................................................................................................................... 2

1.3 DESCRIPTION OF THE AUDIT AREA................................................................................... 3

1.4 AUDIT OBJECTIVE ............................................................................................................... 5

1.5 AUDIT SCOPE ...................................................................................................................... 6

CHAPTER TWO ............................................................................................................................ 7

AUDIT METHODOLOGY ....................................................................................................................... 8

2.1 SAMPLING ........................................................................................................................... 8

2.2 DATA COLLECTION .............................................................................................................. 8

2.3 DATA ANALYSIS ................................................................................................................... 9

CHAPTER THREE ....................................................................................................................... 10

SYSTEMS AND PROCESS DESCRIPTION ........................................................................................ 11

3.1 ROles AND RespONsiBilities Of Key plAyeRs ........................................................ 11

3.2 PUBLIC DEBT ACqUISTION PROCESS ............................................................................ 13

3.2.1 EXTERNAL DEBT ACqUISITION PROCESS ................................................................... 13

3.2.2 DOMESTIC DEBT ACqUISITION PROCESS ................................................................... 14

CHAPTER FOUR ......................................................................................................................... 15

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS ................................................................ 16

4.1 SUSTAINABILITY OF THE PUBLIC DEBT PORTFOLIO ..................................................... 16

4.1.1 STATUS OF UGANDA’S PUBLIC DEBT PORTFOLIO ...................................................... 16

4.2 ADeQUACy Of tHe pUBliC DeBt MANAGeMeNt fRAMeWORK ................................. 28

4.2.1 CONfORMity Of tHe UGANDAN DeBt MANAGeMeNt fRAMeWORK tO RpiNCiples

OF BEST PRACTICE.................................................................................................................28

4.2.2 MEDIUM TERM DEBT MANAGEMENT STRATEGY AND BORROwING PLAN .............. 32

4.3 INSTITUTIONAL/ORGANISATIONAL ARRANGEMENTS ................................................... 33

4.4 BORROwING ACTIVITIES .................................................................................................. 35

TABLE OF CONTENTS

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T

M A R C H 2 0 1 5 iMANAGEMENT OF PUBLIC DEBT BY THE MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT

4.4.1COST OF DOMESTIC BORROwING ................................................................................. 35

4.4.2 tHe issUANCe Of DeBt fOR sHORt-teRM CAsH flOW NeeDs ............................ 39

4.4.3 TECHNICAL EVALUATION OF TERMS OF BORROwING. ............................................. 41

4.4.4 AssessiNG tHe eCONOMiC RAte Of RetURN (eRR) ................................................ 42

4.4.5 FEASIBILITY STUDIES .................................................................................................... 44

4.4.6 TIMELINES wITHIN THE DEBT ACqUISITION PROCESS ............................................. 46

APPENDICES ............................................................................................................................. 48

APPENDIX I: SAMPLED LOANS ....................................................................................................... 48

APPENDIX II: DOCUMENTS REVIEw ............................................................................................... 50

APPENDIX III: INTERVIEwS CONDUCTED ...................................................................................... 52

APPENDIX IV: LOw ABSORPTION PROJECTS ................................................................................ 53

APPENDIX V: TIME FRAME FOR LOAN APPROVALS ...................................................................... 59

LIST OF TABLEStable 1: public debt stock: fy2011/12 - 2013/14 (in UsD Bn) ....................................................... 5

Table 2: IMF and Ugandan Debt Sustainability Thresholds ........................................................ 17

Table 3: Ugandan metrics of debt sustainability ......................................................................... 18

Table 4: Risk management metrics for the Ugandan debt portfolio .......................................... 21

table 5: Domestic Arrears for 2010/11-13/14 ............................................................................. 22

Table 6: Showing Active Government Guarantees as at 30 June 2014 ....................................... 27

Table 7: Assessment of Uganda’s Arrangements for Debt management against IMF

guidance .......................................................................................................................... 29

table 8: selected treasury Bond issues in B-Rated sovereign, 2014 ........................................ 37

Table 9: Showing Comparisons between loan terms .................................................................. 41

table 10: list of Non-Concessional loans committed since June 2013 ...................................... 42

Table 11: Showing a Summary of Low absorption by Sectors as at December 2014 .................. 45

LIST OF FIGURESFigure 1 Public Debt Acquisition Process ....................................................................................... 13

Figure 2: Composition of Uganda’s externally Owed debt (USD, bn) ............................................. 20

Figure 3 Maturity of Domestic Debt Portfolio ................................................................................. 21

Figure 4 IMF and MoFPED Projections of Overall debt sustainability .......................................... 24

Figure 5 IMF and MoFPED projections of External debt Sustainability ......................................... 25

Figure 6: Composition of Domestic Debt Investors ........................................................................ 31

Figure 7 Domestic and External Financing as a % of GDP ............................................................. 35

figure 8 yield to Maturity in Uganda’s treasury Bond Auctions, 2011-2015, (%) .......................... 36

figure 9: end-of year Cash balances for Districts & Municipal Councils,

2009/10-2013/14 UGX, Mn) .............................................................................................................. 40

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T

M A R C H 2 0 1 5ii MANAGEMENT OF PUBLIC DEBT BY THE MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT

LIST OF ABBREVIATIONS AND ACRONYMSY

AfDB African Development Bank

ADF African Development Fund

ADFD Abu Dhabi Fund for Development

AFD Agence Francaise du Development

ALD Aid Liaison Department of MoFPED

BADEA Arab Bank for Economic Development

Bn Billion

BOU Bank of Uganda

CPIA Country Policy and Institutional Assessment

DeMPA Debt Management Performance Assessment

IDA International Development Association

IFAD International Fund for Agriculture Development

IMF International Monetary Fund

INTOSAI International Organisation of Supreme Audit Institutions

JICA Japan International Cooperation Agency

KfW Kreditanstalt für Wiederaufbau (Germany Development Bank)

LIBOR London Interbank Offered Rate

MEPD Macroeconomic Policy Department

MEFMIMacroeconomic and Financial Management Institute of East and Southern Africa

MoFPED Ministry of Finance, Planning and Economic Development

MTDS Medium Term Debt Strategy

OFID OPEC Fund for International Development

PDMF Public Debt Management Framework

SFD Saudi Fund for Development

USD United States Dollars

UGX Uganda shilling

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T

M A R C H 2 0 1 5 iiiMANAGEMENT OF PUBLIC DEBT BY THE MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT

ExECUTIVE SUMMARY

public debt is incurred primarily for financing budget deficits, development of domestic financial markets, supporting the country’s Balance of payment (BOp) position/foreign reserves and monetary policy objectives. In Uganda, public debt is managed by the Ministry of Finance, Planning and Economic Development (MoFPED) in liaison with Bank of Uganda (BoU). Government borrows internally from domestic markets through issuance of Treasury bills and Bonds by BoU and externally through Bilateral and multilateral borrowings. Currently, over 60% of the public debt is external debt and 40% is domestic debt. GoU borrowing has been rising over the years from United States Dollar (USD) 5.7 billion in Financial Year (FY) 2011/12 to USD 7 billion in FY 2013/14. The growing National debt, if not properly managed, could revert to unsustainable levels as was the case in the past.

The major objective of the audit was to assess the efforts being undertaken by Ministry of Finance to ensure that the public debt is acquired in a sustainable manner.

KEY AUDIT FINDINGSThere have been concerted efforts by the Ministry of Finance, Planning and Economic Development to address gaps in the Legal framework for management of public debt through the crafting and eventual approval of the Public Finance Management Act, 2015. the Ministry is also undertaking organizational re-structuring and public financial management reforms in a bid to improve efficiency in budget management as well as plug gaps in the institutional/organizational arrangements for public debt management. Measures to introduce a Treasury Single Account (TSA) for central government accounts were launched in October 2013. The Directorate of Cash and Debt Management was also created in 2014 to better coordinate the forecasting of debt needs with its issuance. The ministry is also commended for its efforts to undertake annual Debt Sustainability Analyses (DSA) in order to check and ensure that the country’s debt levels remain sustainable. Inspite of these achievements, there are still areas of concern discussed as follows.

• for the latest review in 2014, Uganda’s three-year average Country policy and Institutional Assessment (CPIA) score moved below the threshold for ‘strong performer’ status from 3.75 to 3.73. Despite this, the iMf ruled that its classification would remain as a ‘strong performer’, due to remaining within 0.05 of the threshold. It stated however, that another year with a score below the threshold could see the country downgraded. The uncertainty around Uganda’s borderline status as a ‘Strong performer’ because of a drop in its CPIA score is a cause for concern. A downgrade to ‘Medium performer’ could increase external perceptions that the country is at risk of debt distress, thus increasing the government’s cost of borrowing.

• The most recently published data on Ugandan debt sustainability metrics for domestic and external debt levels indicates that the external indebtedness of Uganda does not present any immediate cause for concern, with large amounts of headroom relative

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T

M A R C H 2 0 1 5iv MANAGEMENT OF PUBLIC DEBT BY THE MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT

to the sustainability thresholds set out in the Public Debt Management Framework (PDMF). Nonetheless, for domestic indebtedness, there was limited headroom between the debt stocks recorded in 2013 and the recommended thresholds, as set out in the PDMF. Furthermore, the ratio of domestic debt to private sector credit (a key indicator of the risk of government competing with private sector credit) was very close to the maximum recommended level

• Interest rates on domestic debt have overall stabilised in recent years relative to their peak in 2011/12. However, they remain a cause for concern due to their high contribution to overall debt service costs and the relatively high yields which they attract stand in stark contrast to those achieved by comparator nations with similar credit ratings. taking into consideration the relative inflationary levels however, the difference in yield-to-Maturity when considering Uganda and Cameroon which had issued a similar bond around the same time is larger than would be expected from the inflation differential.

• Overall, there was clear articulation of the high-level aims of debt management strategy, albeit with some gaps in the reporting framework of the Debt Management strategy. for instance, the government does not publish the semi-annual statistical information (Statistical bulletin) on the composition of the public debt, despite there being provision to do so within the Public Debt Management Framework (2013). There was evidence of lack of coordination between the different institutions – for instance the maintenance of two separate databases of outstanding debt maintained, by the Bank of Uganda and the Ministry of Finance. These databases did not always record additions to debt in a similar way. Audit noted that they occasionally needed to be subjected to time-consuming reconciliation processes for any discrepancies identified. It is expected that the harmonization of debt and cash management operations under the new Directorate of Debt and Cash management will result in an opportunity to consolidate reporting into one system.

• By the time of audit, MoFPED had not prepared a Medium Term Debt management Strategy (MTDS) and borrowing plan which provide a framework within which authorities make informed choices on how government’s financing requirement should be met. The MTDS helps to prioritise sectors and areas in which loans will be acquired and the proposed funders in the medium term. The advantage is that donors don’t just dictate to government which areas to fund which may be outside the country’s priorities.

• MoFPED still operates a fragmented Debt management unit (DMU) despite its attempts to create an independent Directorate of Debt and cash management. There was also no clarity and division of roles and responsibilities among the different DMUs. However, efforts to come up with regulations which clearly spell out the roles and responsibilities of key players are commendable.

• MoFPED did not carry out technical and economic assessments of all new loan proposals and projects which therefore compromised the National public Debt risk portfolio and sustainability. With the current trend of acquisition of non-concessional loans (short and medium term to the tune of 4.7billion USD), it is imperative that such technical and economic evaluations are done for all new borrowing proposals to ensure competitive/favourable terms are offered by lenders so that the National Debt remains sustainable in the medium and long term thus mitigating adverse effects of accumulated debt levels on the future generation.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T

M A R C H 2 0 1 5 v MANAGEMENT OF PUBLIC DEBT BY THE MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT

KEY RECOMMENDATIONS• MoFPED should continue to come up with mechanisms to improve on those indicators

such as public sector management, which currently impact on the CPIA scores in order to sustain the strong performer status.

• To address the high cost of domestic borrowing, MOFPED should broaden investor participation in domestic bond market by lowering barriers to participation and promoting bonds to potential investor groups and involving more external participation Furthermore the ministry should continue promoting an environment of low and stable inflation, to lower the inflation risk premium element which may be increasing bid values in domestic auctions.

• MOFPED should continue with its efforts of issuing longer term dated securities to even out the maturity profile and reduce the risk for refinancing

• The ministry should expedite the consolidation of the debt management functions as well as finalization and approval of the regulations spelling out the roles and responsibilities of the different units within the DMU clearly stating the different functions of the front, middle and back Debt Management Unit.

• MoFPED should expedite the preparation of the Medium term debt management strategy and the borrowing plan. This will help explore appropriate strategies to achieve a composition of the debt portfolio which encapsulates the cost/risk trade-offs desired by the government.

• To enhance openness, transparency and predictability, MOFPED should prepare and publish a semi-annual statistical bulletin as required by the public debt management framework so as to avail the general public with debt statistics.

• MoFPED should ensure that technical and economic assessments are carried out for all new borrowing proposals and feasibility studies undertaken by the implementing agencies. This will necessitate building the capacity of the DMU and the implementing agencies

OvERALL AUDIT CONCLUSIONThe MoFPED has conducted a prudent policy of acquiring new debt since 2007 which minimises risks. it has, for instance, chosen not to issue non-concessional debt in a foreign currency, and is continuing to extend the average maturity of domestic debt by issuing 15 year debt. It also continues to prioritise the acquisition of cheaper concessional loans in preference to the more expensive domestic borrowing. These policy measures have contributed to sustainability projections which indicate that the country faces a low probability of debt distress in the short to medium term, even under challenging external macroeconomic and financing environments.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T

M A R C H 2 0 1 5vi MANAGEMENT OF PUBLIC DEBT BY THE MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT

Nonetheless with the current economic conditions characterised by reduced exports and a depreciating Ugandan Shilling against the dollar (30% for the last 4 months) there is a risk of stress which can affect future sustainability. Interest rates on domestic debt remain a cause for concern due to their high contribution to overall debt service costs (78%), and the relatively high yields which they attract stand in stark contrast to those achieved by comparator nations. The full implementation of the plan to consolidate the debt management functions and the roll out of the TSA should lead to improvement in management of the public debt.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T

M A R C H 2 0 1 5 1

1


CHAPTER ONE

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T

M A R C H 2 0 1 52 MANAGEMENT OF PUBLIC DEBT BY THE MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT

1Report on public debt Grants and Guarantees 2011/12-2013/142 Report on Public debt Grants and Guarantees 2013/14 pg. 33 Budget speech FY 2014/15

INTRODUCTION

1.1 BACKGROUNDPublic debt refers to the outstanding liabilities of government requiring future payment of principal and/or interest. Liabilities represent the total outstanding borrowings or obligations of government and comprise of internal (owing to national creditors) and external (owing to foreign creditors). Government borrows internally from domestic markets through issuance of Treasury bills and Bonds by the BoU and externally through Bilateral and multilateral borrowings. Currently over 60% of the public debt is external debt and 40% is domestic debt.1

the use of government securities as a mode of financing for fiscal purpose commenced in fy 2012/13, with funds raised specifically to provide for roads sector financing gap.2

public debt is incurred primarily for financing budget deficits, development of domestic financial markets, supporting the country’s Balance of payment (BOp) position/foreign reserves and monetary policy objectives. In Uganda, public debt is managed by the Ministry of Finance, Planning and Economic Development (MoFPED) in liaison with Bank of Uganda (BoU).

In the past, Uganda’s debt peaked to unsustainable levels such that the economy did not have the capacity to meet its debt repayment obligations. fortunately, Uganda benefited from the various Debt relief initiatives like the Heavily Indebted Poor Country (HIPC) Initiative in 1998, the Enhanced HIPC in 2000 and the Multilateral Debt Relief Initiative (MDRI) in 2006. Despite these initiatives, GoU borrowing has been rising over the years from USD 5.7 billion in Financial Year (FY) 2011/12 to USD 7 billion in FY 2013/14. The growing National debt, if not properly managed, could revert to unsustainable levels as was the case in the past.

1.2 MOTIvATIONpublic debt is becoming an increasingly important source of deficit financing as the domestic revenues continue to perform below the required expenditure, for instance, in F/Y 2013/14 domestic revenues averaged at 12.6% of Gross Domestic Product (GDP) while total expenditure to GDP remained higher at 18.8% a shortfall of 6.2%. In order to bridge this gap and therefore provide critical financing for Government interventions, MofpeD has opted to secure financing through external and Domestic borrowing.

In the FY 2013/14 Public debt increased to USD 7 billion up from USD 6.4 billion in F/Y 2012/13, reflecting a 9.38% increment in one year alone, the increment was way above the GDP growth of 6.2% in the FY 2013/143. Domestic debt accounted for 9.55% (UGX 1,437 billion) of the National budget, 2014/15 an increase of 1.65% (UGX 397 billion) from

CHAPTER ONE

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T

M A R C H 2 0 1 5 3 MANAGEMENT OF PUBLIC DEBT BY THE MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT

7.9% (UGX 1,040 billion) in financial year 2013/14. external financing on the other hand increased from UGX 2,660 billion in F/Y 2013/14 to UGX 2,733 billion of the National budget, 2014/15 an increase of UGX 73 billion. As non-concessional borrowing increases, the need for proper debt management becomes even much greater.

Given the above trend, it is imperative that public debt management activities are performed in accordance with sound principles of public financial management and best management practice, which entail transparency, accountability and predictability. It is also important to ensure that government financing needs are met (by raising the required amount of funding), national wealth is created while mitigating risks, borrowing costs are minimized, the domestic market is developed and debt levels remain sustainable and do not compromise economic stability.

it was therefore against this background that the Office of the Auditor General deemed it necessary to undertake an independent study to assess whether MoFPED acquires public debt in a sustainable manner.

1.3 DESCRIpTION OF ThE AUDIT AREA

1.3.1 GENERAL DESCRIpTIONGovernment finances the budget using internally generated resources, grants and borrowings. Government borrows internally from domestic markets through issuance of Treasury bills and Bonds by the BoU and externally through Bilateral and multilateral borrowings.

In Uganda, public debt is managed by the Ministry of Finance, Planning and Economic Development (MoFPED) in liaison with Bank of Uganda (BoU). The Aid Liaison department (ALD) of MoFPED is the focal point for Aid policy implementation and management while coordinating policy implementation, management and accounting for the resources.

1.3.2 LEGAL FRAMEwORK FOR MANAGEMENT OF pUBLIC DEBT The legal framework for management of public debt in Uganda is enshrined in the Constitution of the Republic of Uganda, 1995 (as amended), and several Acts of Parliament which include: the Treasury Bills Act, 1969, the Bank of Uganda Act, 1993 (as amended), the Budget Act, 2001, and in the Public Finance and Accountability Act (PFAA), 2003. Article 159 of the Constitution of the Republic of Uganda, 1995 (as amended), authorizes the Government of Uganda to borrow from any source provided such borrowing is expressly approved by Parliament. Section 1 of the Treasury Bills Act, 1969 gives the Minister in charge of Finance the authority to borrow by issue of Government treasury bills. Section 4 (2) (e) of the Bank of Uganda Act, 1993 (as amended) authorizes Bank of Uganda to Manage Public Debt.

The Public Finance and Accountability Act, 2003 (PFAA) on the other hand outlines the control and management of public finance. part iii in particular provides for the regulation of Government borrowing. Section 20 of the PFAA vests the authority to raise money by loan and market securities (treasury bills and bonds) in the MoFPED.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


1.3.3 vision and Mission

vISIONthe vision of MofpeD is to be “A most effective and efficient Ministry of finance, planning and Economic Development that is capable of achieving the fastest rate of economic transformation among the emerging economies.”

MISSIONThe mission of MoFPED is “To formulate sound economic policies, maximize revenue mobilization, and ensure efficient allocation and accountability for public resources so as to achieve the most rapid and sustainable economic growth and development.”

1.3.4 Objectives of the public debt managementGovernment’s primary debt policy objectives are:

i. to meet Government’s financing requirements at the minimum cost, subject to a prudent degree of risk;

ii. to ensure that the level of public debt remains sustainable, over the medium- and long-term horizon while being mindful of the future generations; and

iii. to promote the development of the domestic financial market

1.3.5 Organization Structurethe management of public debt takes place at three levels: the front office, the Middle office and the Back office, as illustrated below.

the front office is managed by the Aid liaison Department, in MofpeD, which is responsible for planning, negotiation, external relations, reporting and communication, and monitoring and evaluation of loan effectiveness of External loans. Bank of Uganda (BoU), on the other hand, performs the front office roles for domestic issuance on behalf of MoFPED.

the middle office functions are handled by the Macroeconomic policy Department (MoFPED) which is responsible for conducting research and providing input to debt sustainability analyses as well as carrying out debt sustainability, risks analysis simulations, formulating debt management strategies. the middle office also develops operational procedures to reduce operational risks and to ensure that debt management operations are conducted within stipulated parameters to manage risk exposures. In addition, as adviser to Government, BoU also plays a middle office role with regard to both external and domestic public debt. The bank participates in the national debt sustainability analyses.

the functions of the back office are handled by the treasury services Department (tsD) and these include: processing and disbursement of funds, capturing and validation of debt data, accounting and managing the Debt Management Financial Analysis System (DMfAs). the Bank of Uganda also forms part of the back office as it keeps custody of the loans disbursed by the development partners and runs a parallel DMFAS tool. The bank also maintains the Central Systems Depository (CSD) which is used for recording domestic debt.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T

M A R C H 2 0 1 5 5MANAGEMENT OF PUBLIC DEBT BY THE MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT

1.3.6 Stock of public Debt On average, 60% of public debt is external loans of which Multilateral loans constitute over 80%. The domestic debt is largely derived from the sale of bonds which constituted an average of about 60% over the period fy2011/12 - 2013/14. for the past 2 years (2012/13 and 2013/14), there has been an increase in the share of domestic debt, which is less concessional and this share is projected to increase with the adoption of the Public Private partnership model of financing public infrastructural investments. As non-concessional borrowing increases, the need for proper debt management becomes even much greater.

Table 1: public debt stock: FY2011/12 - 2013/14 (in USD Bn)

FY 2011/12

(Mar 2012)

%

Share

FY 2012/13

(Mar 2013)

% Share

2013/14

(Mar 2014)

%

Share

External Debt Outstanding and Disbursed *

3.053 59.44 3.53 61.71 4.18 59.71

o/w Bilateral 0.279 0.47 1.15o/w Multilateral 2.774 3.05 5.50

Domestic Debt * 2.083 40.56 2.20 38.46 2.82 40.29

o/w Treasury Bills 0.864 0.93 1.07o/w Treasury Bonds 1.219 1.27 1.75Total Public Debt 5.136 100.00 5.72 100.00 7.00 100.00

Arrears (UGX Bn) 427.26 605.70 840.28

*Source: Report on Public debt Grants and Guarantees

1.4 AUDIT OBJECTIvEThe overall objective of the study was to assess the extent to which MoFPED ensures that Public debt is acquired in a sustainable manner.

the specific objectives of the Audit were:-

1. To evaluate the measures undertaken by MoFPED to ensure sustainability of public debt;

2. To evaluate the adequacy of the Public Debt Management Framework (PDMF) in enhancing debt sustainability;

3. To assess the extent to which public debt is acquired in a timely manner

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


1.5 AUDIT SCOpEThe Audit covered the roles played by the MoFPED in ensuring that public debt is sustainable with specific reference to composition, costs and maturity periods of debt acquired. The audit also assessed how the institutional arrangements i.e regulatory framework, structures and strategies enhance efficiency in the acquisition process. in evaluating whether the debt, acquisition process facilitates debt sustainability, the audit mainly focused on the acquisition of external debt since it constitutes over 60% of the National debt portfolio. the Audit covered a period of three financial years from 2011/12 to 2013/14.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


CHAPTER TWO

2

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


CHAPTER TWO

AUDIT METhODOLOGYThe audit was conducted in accordance with the International Organization of Supreme Audit Institutions (INTOSAI) Performance Auditing Standards and the Performance Auditing guidelines prescribed in the Office of the Auditor General (OAG) VfM audit manual. The standards require that the audit be planned in a manner which ensures that an audit of high quality is carried out in an economic, efficient and effective way and in a timely manner.

To achieve this, the audit followed the practical guide on “Auditing Public Debt Management” developed by the INTOSAI Development Initiative (IDI) in collaboration with INTOSAI working Group on Public Debt (wGPD), International Monetary Fund (IMF) Revised Guidelines for Public Debt Management 1st April 2014, world bank Debt Performance Assessment tool (DeMPA), Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) guidelines on Public debt Management and the Uganda Public Debt Management Framework (PDMF) 2013.

2.1 SAMpLINGThe study was conducted at the Ministry of Finance Planning and Economic Development headquarters and Bank of Uganda. in addition, thirty five out of 70 active loans were purposively selected based on the borrowing terms of the loans. The less concessional loans were selected first as they are apparently more costly to the economy then followed by a random selection of concessional loans. the loan files were reviewed to ascertain whether the approved loan acquisition process was followed and whether they were acquired at the least cost possible with a prudent degree of risk. Appendix I provides details of the sampled loans.

2.2 DATA COLLECTIONthe following data collection methods were used to gather evidence for the audit:-

2.2.1 Document review

Various documents were reviewed to obtain an in-depth understanding of the legal and institutional framework for public debt acquisition as well as the current National Debt Portfolio. The documents reviewed included: The Constitution of the Republic of Uganda, 1995 as amended; the Treasury bills Act, 1969; the Bank of Uganda Act, 1993; the Budget Act 2001; the Public Finance and Accountability Act, 2003; the Public Debt Management Framework 2013; Uganda Debt Sustainability Report (FY 2011 – 2013); and Budget speeches. Other documents reviewed are shown in Appendix II.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


2.2.2 Interviewsthe team conducted 13 interviews with officials of MofpeD, officers in Bank of Uganda, world bank, European Union and the African Development bank which are the key agencies involved in the Public debt acquisition process. Details of the interviews conducted are indicated in Appendix III. The information obtained from the interviews was used to triangulate/corroborate that obtained through document review.

2.3 DATA ANALYSIS

Data collected was analysed to establish performance trends in public debt management over the period under review as well as to determine variations between standards set and actual implementations. The analysis was also intended to check compliance with the established Public debt management procedures, laws and regulations. The models used to carry out debt to GDP analysis; sustainability and appraisal of development projects were also assessed.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


CHAPTER THREE

3

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


CHAPTER THREE

SYSTEMS AND pROCESS DESCRIpTION

3.1 ROLES AND RESpONSIBILITIES OF KEY pLAYERS

MoFpED

At the executive level, the public debt management function is constitutionally delegated to the Minister for Finance. The Minister is responsible for directing and organizing the entire public debt management system, including policy formulation, regulation and mobilization of resources as well as establishment of a legal framework to govern public debt functions.

the MofpeD identifies the overall budget financing needs consistent with the fiscal and debt sustainability framework. A Debt Sustainability Analysis (DSA) is carried out annually by MoFPED as the lead institution, and the ministry advises on the overall debt management policy.

The Ministry presents borrowing requirements to cabinet and to parliament for authorization or approval as may be necessary in accordance with the laws, regulations and policies in force. MofpeD also spearheads negotiation and re-negotiations of terms and conditions of public debt and, signing debt agreements.

Bank of Uganda

The Central Bank of Uganda provides advice on debt management in accordance with the Bank of Uganda Act, 1993. within the debt acquisition process, the bank is charged with the responsibility of determining the type of domestic debt to issue, the asset mix, the calendar, the volumes to be issued and issuing of domestic debt in a given year. BoU also maintains an up-to-date database (DMfAs and CsD) of the country’s indebtedness and assesses how Uganda’s current level of debt and prospective new borrowing would affect the country’s ability to service its debt.

The parliament

The parliament is responsible for approving new loans that the government intends to acquire and approving the amount to be borrowed domestically in a given year, as provided for in Article 159 (2) of the constitutions of Uganda 1995 (as amended)

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


The Accountant General’s Office

the Debt Management Unit (DMU) in the Accountant General’s Office, operates a Debt Management and Financial Analysis System (DMFAS) for recording and reporting domestic and external public debt. It maintains a debt amortization schedule that shows the opening balance, additions in the year, repayments and closing balance for each loan or credit.

The Accountant General processes debt service payments, monitors and reports on loan disbursements and obtains details of all financial assets of government for the purpose of computing the country’s net debt position. The Accountant General is also responsible for loan drawdown (signing of loan withdraw applications).

Other Ministries, Departments and spending Agencies (MDAs)

Ministries Departments and Agencies (MDAs), through their Sector working Groups, identify projects to be funded and prepare project proposals which are submitted for consideration to MoFPED. The MDAs also participate in all consultations and negotiations of all loan agreements for projects and programmes under their jurisdiction, in close collaboration with the National Planning Authority.

Solicitor General

The Solicitor General provides legal support and advice throughout the loan acquisition process, including comments on the legality of a project, and provides support during Cabinet and parliamentary approval in order to provide clarification on any matters. the Solicitor General also forms part of the negotiation team.

Attorney General

The Attorney General gives a legal opinion on the loan agreements after parliamentary approval and signing of the agreement. The legal opinion is a no objection on behalf of GoU to the terms of the signed agreement and it is against this opinion that the loan becomes effective.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


CHAPTER THREE

3.2 pUBLIC DEBT ACQUISTION pROCESS

3.2.1 External debt acquisition process

Figure 1a: External debt acquisition process

the external debt acquisition process involves project identification where line ministries identify the project, discusses it in the sector working group and forwards it to the development committee for approval. After approval by the development committee the Aid Liaison department under the directorate of economic affairs prepares and solicits for funding. Project appraisal is done and negotiations between MoFPED and potentiation financers proceed, loan documentation is agreed upon and initiated, sent to cabinet and parliament for approval before eventual loan signing is done.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


3.2.2 Domestic debt acquisition process

Figure 1b: Domestic debt acquisition process

The key players in the domestic debt acquisition process are MoFPED and BoU. The process starts with determination of the borrowing needs by MoFPED followed by discussions between the players, that is, MoFPED/BoU to agree on the timing and amounts to be borrowed domestically.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


CHAPTER FOUR

4

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


CHAPTER FOUR

FINDINGS, CONCLUSIONS AND RECOMMENDATIONSThe audit noted that there have been concerted efforts by the Ministry of Finance, Planning and Economic Development to address gaps in the Legal framework for management of public debt. This has been achieved through the crafting and eventual approval of the Public Finance Management Act, 2015. The Ministry is also undertaking organizational re-structuring and public financial management reforms in a bid to improve efficiency in budget management as well as plug gaps in the institutional/organizational arrangements for public debt management.

Measures to introduce a Treasury Single Account (TSA) for central government accounts were launched in October 2013. This involved the closure of over 400 government accounts and an automatic arrangement whereby end-of-day balances of unspent cash are swept back into the Consolidated Fund. The Directorate of Cash and Debt Management was also created in 2014 to better coordinate the forecasting of debt needs with its issuance, with a recruitment exercise announced in November 2014 for a Debt Issuance Expert and a Cash Management Expert.

The creation of the new Directorate of Debt and Cash management should help to improve financial management further by allowing the issuance of securities for cash management to be more responsive to short-term cash flow needs.

The ministry is also commended for its efforts to undertake annual Debt Sustainability Analyses (DSA) in order to check and ensure that the country’s debt levels remain sustainable.

Despite these achievements, audit noted some areas that need improvement and these are presented as follows:

4.1 SUSTAINABILITY OF ThE pUBLIC DEBT pORTFOLIO

4.1.1 Status of Uganda’s public Debt portfolioA core objective of the Ugandan public debt policy is to ensure that the level of public debt remains sustainable, both in the medium and long term.

To ensure this outcome, the Public Debt Management Framework (2013) prescribes limits for the ratio of Uganda’s debt stock and debt service to various macroeconomic country indicators (e.g. domestic budget revenue). The intention is that these limits guide the contracting and management of government debt while maintaining a high degree of debt sustainability. These limits are largely guided by IMF and world Bank Country Policy and Institutional Assessment (CPIA) country scores, which use empirical analysis to relate country-specific factors (e.g. debt burden, quality of institutions) to the probability of debt distress.4 Table 2 sets out the relationship between CPIA score and the recommended policy thresholds.

4 iMf, iDA, Debt- sustainability in low-income Countries—proposal for an Operational Framework and Policy Implications,2004

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


a) IMF and world Bank sustainability thresholds

for the latest review in 2014, Uganda’s three-year average CpiA score moved below the threshold for ‘strong performer’ status 3.75 to 3.73. Despite this, the IMF ruled that its classification would remain as a ‘strong performer’, due to remaining within 0.05 of the threshold. It stated, however, that another year with a score below the threshold could see the country downgraded5

Despite its current designation as a ‘strong performer’, MoFPED has chosen to adhere to thresholds that are in some respects stricter than the iMf-World Bank guidance (e.g. the debt/exports threshold), but in other respects more lax (debt service to revenues).

Table 2: IMF and Ugandan Debt Sustainability Thresholds 6 7

Strong performer

(CPIA >3.75)

Medium Performer (3.25<CPIA<3.75)

PDMF (2013) Thresholds

PV of debt in per cent of

Exports 200 150 150

GDP 50 40 50

Revenue 300 250 300

Debt service in per cent of

Exports 25 20 25

Revenues 22 20 35

Management Response

Country Policy and Institution Assessment (CPIA) frame work ratings of Uganda are buoyed by the good Economic Management rating of 4.2(including debt policy of 4.5) while hampered by the fair rating of Public Sector Management and Institutions (3.0). As a country, we note that improvements in other indicators will enable keep us in the strong performers’ status.

Audit Comment The uncertainty around Uganda’s borderline status as a ‘Strong performer’ because of a drop in its CPIA score is a cause for concern. A downgrade to ‘Medium performer’ could increase external perceptions that the country is at risk of debt distress, increasing the government’s cost of borrowing.

5MF, Uganda: Third Review Under the Policy Support Instrument, Country Report no. 14/344, December 20146 factsheet: the Joint World Bank – iMf Debt sustainability framework for low-income Countries, http://www.imf.org/external/np/exr/facts/jdsf.htm, Accessed 28.02.157 Republic of Uganda, Public Debt Management Framework, 2013

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Recommendation

The Ministry should come up with mechanisms to improve the CPIA scores and therefore sustain a ‘Strong performer’ status by improving overall performance of the indicators. Noted areas such as Public Sector Management and Institutions criteria in which performance is still low need improvement.

b) Uganda Debt sustainability metrics

The most recently published data on Ugandan debt sustainability metrics for domestic and external debt levels indicates that the external indebtedness of Uganda does not present any immediate cause for concern, with large amounts of headroom relative to the sustainability thresholds set out in the PDFMF (Table 3). Nonetheless, for domestic indebtedness, there was limited headroom between the debt stocks recorded in 2013 and the recommended thresholds, as set out in the PDMF.

Furthermore, the ratio of domestic debt to private sector credit (a key indicator of the risk of government competing with private sector credit) was very close to the maximum recommended level. MoFPED have not published more recent data on domestic credit metrics than June 2013, making it difficult to assess to what extent progress has been made against these indicators.

Table 3: Ugandan metrics of debt sustainability

Metric PDMF Criterion Status8 9

Dom

estic

Present value of domestic debt stock / GDP <20% 12.2% (June 2013)

Domestic interest cost / Domestic revenue <15% 12.1% (June 2013)

Domestic interest cost / Total Government Expenditure <10% 8.5%

(June 2013)

Domestic debt stock / Private Sector Credit <75% 74.6% (June 2013)

Sovereign credit rating B+ (s&p) B (Fitch)10

B+ (Fitch) (Feb 2015)

Exte

rnal

Present value of external debt to GDP <30% 9.4% (Dec 2014)

Present value of external debt to exports of goods and services <150% 43.4%

(Dec 2014)

Present Value of External Debt to Domestic Budget Revenue (PV/DBR) <300% 72.1%

(Dec 2014)

Total External Debt Service to Export of Goods and Service (TDS/XGS) <25% 2.7%

(Dec 2014)

Total External Debt Service to Domestic Budget Revenue (TDS/XGS) <35% 4.5%

(Dec 2014)

8June 2013 figures are from the Public Debt Management Framework, MoFPED 2013, 9 Dec 2014 figures are from iMf, Uganda: Third Review Under the Policy Support Instrument, Country Report no 14/344, December 201410 Credit ratings to be maintained or exceeded

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Management Response

Domestic debt ratios are just within the Public Debt Management Framework 2013 (PDM2013) criteria. It is important to note that the ratios were far beyond the set criteria over 10 years ago. A case in point, prior to the PDM2013, the ratio of Domestic debt/Private sector credit had reached 130% by 2005 necessitating setting the ratio to less than 100% under the 2007-Debt strategy.

2001 2002 2003 2004 2005 2006Domestic Debt/PSC 86% 110% 117% 118% 130% 130%

The current set criteria of 75% under the PDM2013 came as a result of aiming to reduce the ratio further.

Audit Comment

Audit appreciates government’s efforts to create more ambitious thresholds of 75% (compared to the previous targets of 100%) especially with the current high YTM for domestic debt, where lenders may be more inclined to lend to government than the private sector. It is thus important that the Ministry sets realistic targets, which they can enforce, in line with comparable countries and prevailing economic conditions.

Reporting of the full spectrum of debt metrics is not sufficiently frequent to be able to provide sufficient assurance on the level, and evolution of, the domestic debt. in particular, recent evidence is not available on whether domestic debt is within levels which risk driving up private sector debt costs, which could hamper GDP growth.

c) Risk Management

Further analysis shows that the composition as well as the absolute quantity of publicly guaranteed debt can present risks which can threaten sustainability. There are two particular risks which are relevant and affect the Ugandan debt portfolio:

Exchange rate risk:

• Debt denominated in foreign currencies can give rise to large and an unanticipated liability where the home currency depreciates. Over the course of 2010, for instance, the Ugandan Shilling depreciated 20 per cent against the US Dollar, implying a similar increase in the government’s dollar-denominated liabilities, when measured in Shillings.

Refinancing risk:

• too much debt falling due for refinancing within a short period of time risks the bond market charging a premium due to the higher demand for debt, thereby increasing average debt service costs.

exchange rate risk is entirely confined to the external part of the Ugandan debt portfolio, as there is no foreign-currency domestic debt. Outstanding external debt (including arrears) stood at USD 4.3bn on December 2014, or around 20 per cent of Ugandan GDP. This accounts for around 58% of the total of publicly guaranteed debt (32.5 per cent of GDP). Figure 2 sets out a breakdown of this debt into its different currency denominations:

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Figure 2: Composition of Uganda’s externally Owed debt (USD, bn)

*SDR= Special Drawing Rights (Claims on IMF member country reserve assets) Source: World Bank Data

the external debt is almost entirely fixed rate, and characterised by loans which have long maturity and grace periods (an average time to maturity 12.6 years). This limits the impact of adverse exchange rate movements in the near future, and means that inflation will play a part in eroding the real value of the principal of these loans – offsetting some of the eventual impact of adverse exchange rate movements.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


in the discussions on the issuance of dollar-denominated domestic debt in the near future, the BOU advised against such borrowing especially where absorptive capacity was still low as this would un-necessarily increase the cost of external debt. similar difficulties were cited for Ghana, and it was highlighted that the debt-service costs on the dollar-denominated debt rose sharply after the Cedi fell 35 per cent against the dollar in a year.11

the pDMf 2013 assesses refinancing risks against its own set of control thresholds. in June 2013, performance against these thresholds indicated material refinancing risks due to the high proportion of debt maturing within 1 year (Table 4).

Table 4: Risk management metrics for the Ugandan debt portfolio12

Risk management benchmarks Criterion Status (2013)

Ris

k

man

agem

ent Percent of debt maturing in 1 year <40% 57.2%

Percent maturing after 1 year <20% 17%Ratio of bonds to bills 70:30 62:38Average time to refinancing >3 years 1.8 years

Average time to maturity >3 years 1.8 years

the government has since made progress in reducing its exposure to refinancing risk however – notably by introducing longer maturity (15 year) bonds in 2013. In December 2014, about 47 per cent of the total 9,267bn UGX of domestic debt was due for refinancing within 1 year13 (by December 2015). Details as in Figure 3 below

Figure 3: Maturity of Domestic Debt portfolio

Source: BOU as at Feb 2015

figure 3 shows the highly front-loaded maturity profile of the domestic debt portfolio. the average number of years to maturity of domestic loans is relatively low at 2.5 years (below the recommended 3 yrs), which increases the risk that unfavourable financing conditions may result in an inability to satisfy the government’s requirement for refinancing and raising the new finance it needs.

11H. Abdalla, Uganda rules out use of risky Eurobonds, The East African, 30/08/201412MoFPED, Public Debt Management Framework, June 2013,13OAG analysis of BOU Data 31/12/2014

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Management Response

MoFPED intends to take further actions, such as: start budgeting for Principal maturities in order to reduce rollover risk, take greater involvement with primary dealers and other stakeholders in the financial market such as Nssf as well as facilitating counter trading of securities in Uganda Securities Exchange with a target of reducing the Yield to Maturity (YTM).

Audit Comment

the involvement with the primary dealers and other stakeholders in the financial market is welcome strategy albeit the specific activities and extent of involvement need to be articulated.

Recommendation

In addition to stakeholder engagement, MoFPED should also consider issuing longer term dated securities to even out the maturity profile and reduce the risk for refinancing

.

d) Domestic Arrears

Domestic Arrears are payables to Government suppliers, employees and service providers which have remained outstanding at the end of every financial year. these arrears imply that government departments delay payments for goods supplied, services rendered and pension liabilities. These are implicit claims on government (borrowings) which have to be honoured at some unspecified future date.

from a review of government (treasury) financial statements it was noted that government had accumulated arrears worth UGX 583,585,553,455 as at 30th June 2014. Details in Table 5 below:

Table 5: Domestic Arrears for 2010/11-13/14

Details 2010/11 2011/12 2012/13 2013/14

Domestic arrears (UGX Bn)

473.65 763.19 1,127.24 583.59

*Source: Treasury Statements of Financial position (2010/11-2013/14)

Although these arrears are not normally included in the public debt stock figures, they represent a future liability to government. Further analysis shows that the composition of these arrears includes a big proportion of these debts arising from court awards which attract interest until fully paid. this increases both the refinancing and interest rate riskiness of the debt.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Management Response

Domestic arrears are normally excluded from public debt but only disclosed as memorandum item as the process for contracting arrears is unique and outside the legal framework for acquiring debt. The scope of public debt also tends to exclude arrears as a best practice especially as it is an area that is prone to abuse. The Debt strategy stipulates measures for reduction and eventual elimination of arrears that is, 1st call on next FY Resources, IFMS implementation, and prepayment of utilities etcetera. In addition, the PDMF 2013 has provided guidelines to reduce the incurring of domestic arrears that include publishing a shame list for accounting officers who commit government without authority and punitive measures.

Audit Comment

Although Domestic arrears are normally excluded from public debt, they are legally binding and still have to be paid off, with likely consequences if not paid. Their constant variations year by year is also a cause of concern which if not contained can cause significant challenges to government budgets. Moreover, this is an area that still contributes to the Country’s low performance under the CPIA assessments.

Although government has undertaken reforms, including introduction of Commitment control system, this area is still a challenge.

Recommendation

there is need for the MOfpeD, in liaison with MDA Accounting Officers, to come up with a strategy or framework within which liabilities such as domestic arrears can be verified, authenticated, reported and paid off to avoid accumulation and future strain on government budgets.

e) Debt sustainability projections and stress-testing

The IMF’s December 2014 sustainability assessment of Ugandan debt used the joint world Bank – IMF Debt Sustainability Framework for Low Income Countries14. The exercise used a model calibrated with macroeconomic assumptions to project debt sustainability ratios 20 years ahead. The base case broadly assumes a continuation of the existing debt issuance environment (deepening of domestic debt markets, continued availability of non-concessional loans with a grant element of 15-20 per cent), average medium-term real GDp growth of 6.5% per annum, and a long-term average fiscal deficit of 2.75 per cent of GDP.

The analysis features sensitivity analysis of key input variables meant to represent unpredictable adverse shocks which the economy may experience. These include (assuming a base year of 2015):

A1. Real GDP growth and primary balance restricted to historical averagesA2. Primary balance remains unchanged from 2015 A3. Permanently lower GDP growthB1. New public sector loans on less favorable terms in 2015-35

14IMF, Uganda: Third Review Under the Policy Support Instrument, Country Report no 14/344, December 2014

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


B2. Real GDp growth at historical average minus one standard deviation in 2016-17

B3. export value growth at historical average minus one standard deviation in 2016-17

B4. Us dollar GDp deflator at historical average minus one standard deviation in 2016-17

B5. Net non-debt creating flows at historical average minus one s.D in 2016-17

B6. Combination of B1-B4 using one-half standard deviation shocks

B7. One-time 30 per cent UGX/UsD currency depreciation in 2016

B8. 10 per cent of GDp increase in other debt-creating flows in 2016

Figures 4) and 5) compare the projections of the IMF exercise with that of 2013 National Debt Sustainability Report, 2013, which used the same framework.

Figure 4 IMF and MoFpED projections of Overall debt sustainability15 16

15The alternate scenario was ‘Primary balance unchanged from 2015 level’ for A) B) and C) 16worst shocks were: ’Primary balance unchanged from 2015’ for A) and ‘30% depreciation in UGX/USD in 2015’ for B) and C)

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Figure 5 IMF and MoFpED projections of External debt Sustainability17

17worst shocks were 30% depreciation in UGX/USD in 2015’ for D), F), and H) and ‘Net non debt creating flows at historical average minus one standard deviation in 2016-2017’ for e) and G)

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Figures 4 and 5 suggest that Uganda is unlikely to enter debt distress in the short to medium term, even given pronounced adverse shocks to the economy.

This notwithstanding, the projections are sensitive to both changes in base year data and assumptions about the future financing environment. Although a year of data separates the MoFPED and IMF forecasting exercises and they both use the same debt sustainability tool, there are material differences in the ratios projected by both exercises, highlighting how near-term changes can affect future sustainability. in almost all scenarios MofpeD projections appeared superior to those of IMF. This may not be realistic given that the space before the recommended policy thresholds are breached would be greatly reduced if alternative economic scenarios (e.g. 30 per cent depreciation) were to come to pass, or if the thresholds themselves were reduced following a downgrade of Uganda’s country status to ‘Medium performer’.

Management ResponseThe observation is valid although it is also important to note that IMF tends to have more information on the input variables hence the deviations.

Audit Comment

The MoFPED has conducted a prudent policy of acquiring new debt since 2007 which minimises risks. it has, for instance, chosen not to issue non-concessional debt in a foreign currency, and is continuing to extend the average maturity of domestic debt by issuing 15 year debt. It also continues to prioritise the acquisition of cheaper concessional loans in preference to the more expensive domestic borrowing. These policy measures have contributed to sustainability projections which indicate that the country faces a low probability of debt distress in the short to medium term, even under challenging external macroeconomic and financing environments.

Nonetheless with the current economic conditions characterised by reduced exports and a depreciating Ugandan Shilling against the dollar (30% for the last 4 months) there is also a risk of stress which can affect future sustainability.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Recommendations MoFPED should Continue to conduct debt sustainability assessments and stress testing, reflecting the latest evidence on borrowing trends and economic conditions in its forecasting assumptions. The assumptions should as much as possible be comparable or reconciled to IMF variables

f) Guaranteed LoansAccording to S.25 of the Public Finance and Accountability Act, 2003 the Minister for Finance is authorised to guarantee loans to state enterprises, local government councils or any other authority established by an Act other than a local government council and any public body which has in any of its financial year received more than half of its income from public funds.

interviews with officials of AlD department of MofpeD and a review of the report on public debt, grants and guarantees for FY 2013/14 revealed that Government guaranteed loans to private entities to the tune of UsD 139.88 million between the financial year 2006 and 2010 as detailed in table 6.

Table 6 Showing Active Government Guarantees as at 30 June 2014

CREDITOR PROJECTYEAR OF

ISSUE

BENEFICIARY AMOUNT

(USD)

BOU Apparel tri-star 2010 Apparel tri-star 6,037,986

IFCPartial Risk Guarantee For Bujagali Project

2007 Bujagali Energy Ltd115,000,000

IDAeA trade & transport Facilitation

2006 Rift Valley Railways 10,000,000

IDB Student Hostels Project 2009IUIU

5,214,000

IDB Student Hostels Project 2010IUIU

567,000

UDBL Apparel tri-star 2010 Apparel tri-star 3,060,636

TOTAL 139,879,622

*Source: Report on Public Debt, Grants and Guarantees FY 2013/14

The issuance of the loan guarantees to private entities was not undertaken in accordance with the provisions of the PFAA, 2003. Such guarantees pose a high default risk which may result in government losing the amounts guaranteed in the event that the entities fail to honor their obligations. For instance, in FY 2012/2013, Government was called upon to honor its obligations for the guarantee issued in favour of Phoenix logistics limited amounting to USD 5.5 million after they had failed to repay. This unnecessarily raises the stock and riskiness of public debt and may impact on the debt sustainability.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


MoFPED has also not come up with mechanisms for assessing the probability of default. This would not only allow MoFPED to provide and prepare for their redemption but also enhance the debt stress testing exercise performed by the Ministry.

Management response

All guarantees issued were after seeking parliamentary approval. However there is need, as observed, to monitor the guarantees and annually present the status of risk exposure and mitigations in place.

Audit Comment

Evidence was not provided to show that explicit approval for the guarantees was granted by parliament. In any case that would also be inconsistent with the law. Besides, there is no guideline that the Ministry follows in identifying which entity should benefit from such guarantees and how the Ministry analyses the risks associated with such guarantees. This increases the public debt stock in the event of default and threatens the debt sustainability.

Recommendation

MoFPED should:

• Adhere to the provisions of the law relating to loan guarantees and ensure that those entities, for which loans are guaranteed, due diligence is carried out to assess the capacity of the borrowing entity to repay.

• Monitor the guaranteed loan performance in order to mitigate the risk of default.

4.2 ADEQUACY OF ThE pUBLIC DEBT MANAGEMENT FRAMEwORK

4.2.1 Conformity of the Ugandan Debt Management Framework to principles of best

practice

we reviewed the provisions of the Ugandan Public Debt Management Framework and associated legislation to assess their conformity to the International Monetary Fund (IMF) guidance on Public Debt Management18 19 This guidance focuses on four themes which are recognised as desirable elements of a robust debt management framework, that is:

Transparency and accountabilityClearly articulated objectives with frequent reporting to

assess progress.

Institutional framework

Clearly defined legal mandate to borrow, and well-

designed governance arrangements to limit operational

risks.

Monitoring of risksfrequent assessment of the risk profile and sustainability

of government’s debt portfolio and strategy

Developing and maintaining an

efficient market for government

securities

Policies which support a transparent and liquid domestic

bond market which enables buyers and sellers to transact

efficiently at prices reflecting fair value.

18Revised guidelines for Public Debt Management (IMF, 2014)19 Developing a medium- term Debt Management strategy (iMf, 2009)

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Our review of documentary evidence and interviews with the staff responsible for debt management indicates a high degree of conformity to the IMF guidelines on debt management (see Table 7).

Table 7: Assessment of Uganda’s Arrangements for Debt management against IMF

guidance

Theme IMF CriterionOur assessment of the Ugandan DMF’s conformity

Objectives of debt management strategy clearly described

and documented PP

Clarity of roles for debt issuance, settlement, and record-

keepingP

Transparency and

Accountability

Annual reporting of outcomes relating to debt management

strategyPP

A medium term debt management strategy exists O

Regular updates concerning the composition of public debt

liabilitiesP

Dialogue with investors to understand what they want P

Authority to borrow clearly defined in legislation PP

Strong controls over settlement and access to loans data PP

Institutional

framework

separation between front, middle and back-office functions

to promote independence and enable objective performance

assessment

PP

Code of conduct and conflicts of interest policy for employees PP

Accurate and comprehensive management information

systemPP

Risks in debt structure carefully monitored and evaluated P

Monitoring of risks Market neutral scenarios to assess sustainability P

Stress testing of key assumptions P

A broad investor base investing in sovereign debt P

Developing and maintaining an efficient market for government securities

Debt management operations are transparent and

predictableP

Debt issuance uses competitive mechanisms PP

Government and the central bank polices to promote a

resilient secondary marketP

Key: PP=Strong conformity P =Partial conformity O=Limited or no conformity

*Source: Revised Guidelines for Public Debt Management, IMF (2014) and deduction of audit team

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Overall, we found there was clear articulation of the high-level aims of debt management strategy, albeit with some gaps in the reporting framework of the Debt Management strategy. for instance, the government does not publish the semi-annual statistical information (Statistical bulletin) on the composition of the public debt, despite there being provision to do so within the Public Debt Management Framework (2013).

the institutional framework allowed sufficiently clear division of responsibilities between the various units responsible, though we found evidence duplication between the different institutions – for instance, the maintenance of two separate databases of outstanding debt maintained, by the Bank of Uganda and the Ministry of Finance. These databases did not always record additions to debt in a similar way. Audit noted that they occasionally needed to be subjected to time-consuming reconciliation processes for any discrepancies identified. it is expected that the harmonisation of debt and cash management operations under the new Directorate of Debt and Cash management will result in an opportunity to consolidate reporting into one system.

The operational risks of debt management operations have been well covered by the controls process at the Bank of Uganda. we note as a positive feature, the existence of clauses in the Bank of Uganda Administration Manual which forbid staff from investing in areas where there is a conflict of interest. furthermore, there are detailed cross-referencing and controls processes on payment and record storing at the Bank of Uganda to minimise the risk of fraudulent activity relating to both domestic and external loans.

The Debt Sustainability Assessment and the Report on Public Debt, Grants and Guarantees are the primary reporting instruments for the risk and sustainability analysis which MoFPED conducts on its debt portfolio and borrowing plans. we found the form of testing and metrics which these documents contain to be of a level of detail consistent with the IMF guidance– indeed MoFPED and the IMF use the same forecasting model to derive their estimates of Uganda’s future debt sustainability metrics. These both involve a discussion of risks to the government’s debt portfolio, as well as detailed projections of sustainability spanning 20 years into the future, under different scenarios.

Finally, although the domestic bond market has clearly developed and deepened over time, and there is a well-established and competitive bond auction system, we found evidence that the investor base is not as broad as it could be, with the auctions of debt dominated by one large institutional investor – National Social Security Fund, and external ownership of domestic debt at a rather low 13 per cent. Figure 6 refers.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Figure 6: Composition of Domestic Debt Investors

Liquidity in the secondary bond market is increasing. The ratio of secondary market turnover to the stock of outstanding securities increased from 35 per cent in 2011 to 58 per cent in 201220; however, real-time reporting of bid and offer prices and greater incorporation of electronic trading could improve this further.

Management response

The PDMF 2013 is only a framework for managing public debt and is not intended to set responsibilities and governance structures. However, with the enactment of the Public Finance Act (2015), GOU is in the process of preparing regulations which clearly spell out the roles and responsibilities of key players. Furthermore, MoFPED is withdrawing the functions BOU was undertaking of maintaining the database so that the time consuming reconciliations are eliminated.

The approval of the PDM framework was in early 2014, despite the process having started early in 2013, which caused delays in the publication of the document. However, effective f/y 2015/2016, MofpeD will publish the semi-annual debt statistical bulletin and shall make debt data publicly accessible both on the MoFPED website and the Aid Management Platform (AMP).

Plans are also underway to explore means of increasing the investor base by including other institutional investors such as Insurance and other pension funds.

Audit Comment

Institutional arrangements for debt management in Uganda largely conform to principles of best practice as set out in IMF guidelines. In some areas, such as reporting of debt and progress against objectives, reporting could be made more regular, and the domestic bond market has some way to go before it can be considered to be in a mature phase of its development.

20Source: http://www.bis.org/review/r130208d.pdf

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Recommendations

MoFPED should:

• Build the capacity of its debt management and reporting systems to be able to provide lawmakers and the public with a consistent and up-to-date account of all publicly guaranteed debt; internal and external. One way of providing this would be via a publicly accessible database of domestic and external debt issuance capable of providing extracts and reports.

• Review its arrangements for public Debt Management to clearly set out responsibilities and governance arrangements surrounding debt management operations for the new Directorate of Debt and Cash Management, as this will for the first time consolidate responsibilities for debt and cash management in one operational unit.

• expedite the formulation and approval of regulations spelling out the various roles

• to improve competition and growth of secondary market, there is need for introduction of real-time reporting of bid and offer prices and greater incorporation of electronic trading.

• prepare and publish a semi-annual statistical bulletin as required by the Public debt management framework so as to avail the general public with debt statistics and enhance openness, transparency and predictability of the public debt management process.

4.2.2 Medium Term Debt Management Strategy and Borrowing plan

According to the Guidance note for country authorities issued by IMF21 and similar guidelines stipulated by MEFMI, the debt manager should prepare a debt management strategy and an annual borrowing plan to guide borrowing activities. MoFPED in its Public Debt Management Framework, 2013, set out to prepare a Medium Term Debt Management Strategy (MTDS) in line with the Public Debt Management Framework to provide Government’s detailed financing strategy for the 5-year Medium term period (2013-2018). The MTDS was meant to operationalize the Public debt Management Framework22 and therefore incorporate an assessment of developments in the macroeconomic and fiscal outlook and the risk-cost trade-offs of alternative strategies to meet government’s financing requirements.

interviews with officials of the Debt and cash management directorate of MofpeD revealed that the MoFPED had neither prepared a Medium Term Debt Strategy nor a borrowing plan for acquisition of external debt.

The failure to prepare the MTDS was attributed to delays in the approval of the framework by MoFPED Top management. Audit however attributed the lack of the MTDS and the borrowing plan to the inability by MoFPED to prioritise the activity.

21 Developing a Medium-term Debt Management strategy (MtDs)— Guidance Note for Country Authorities22 Public Debt Management Framework, 2013

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


in the absence of the MtDs, it is difficult to determine the impact of alternative borrowing strategies on debt sustainability and management indicators. it is also difficult to determine the total amount to be raised through each available borrowing instrument in order to meet the annual budget financing requirement at lower risk/costs. A good MtDs can be used to evaluate the cost-risk trade-offs, identify and manage risk, facilitate coordination between Monetary and Fiscal management, identify constraints, potentially lower the cost of debt servicing. In addition, an effective and transparent MTDS supports domestic debt market development, and facilitates the relationship with investors, creditors and rating agencies. A formal and explicit MtDs can help build broad-based support for responsible financial stewardship, enhancing governance and accountability23. The borrowing plan on the other hand helps operationalize the MTDS.24

Management response

the MtDs is under preparation and will be finalized by April 2015. this is also a requirement under the PFM Act 2015 to inform the budget.

Audit Comment

By the time of audit, MoFPED had not prepared a Medium Term Debt management Strategy and borrowing plan which provide a framework within which authorities make informed choices on how government’s financing requirement should be met. the MtDs helps to prioritise sectors and areas in which loans will be acquired and the proposed funders in the medium term. The advantage is that donors don’t just dictate to government which areas to fund which may be outside country’s priorities.

Recommendation

MoFPED should expedite the preparation of the Medium term debt management strategy and the borrowing plan. This will help explore appropriate strategies to achieve a composition of the debt portfolio which encapsulates the cost/risk trade-offs desired by the government. This should encompass a fuller analysis of the risks and opportunities posed by long-term trends in Uganda’s macroeconomic environment, and spell out linkages between debt management and the fiscal, monetary and financial policies of government. These documents should also be published to enhance transparency and accountability in the management of public debt.

4.3 INSTITUTIONAL/ORGANISATIONAL ARRANGEMENTSAccording to the world Bank Debt Management Performance Assessment tool (2009), and the Macro Economic and Financial Management Institute for Eastern and Southern Africa (MEFMI) to which MoFPED subscribes, the debt management Unit (DMU) is the government entity with overall responsibility for the execution or implementation of the Debt management strategy through borrowing, and other debt-related transactions. the DMU is composed of the front, middle and back office. in order to ensure that the DMU functions efficiently and promotes an effective system of checks and balances,

23 Developing a Medium-term Debt Management strategy (MtDs)— Guidance Note for Country Authorities24Developing a Medium-term Debt Management strategy (MtDs)— Guidance Note for Country Authorities

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


organisational arrangements for public debt management should be clearly specified and properly documented. The mandates, roles and responsibilities of the different debt management units should be well articulated. In general, the organizational arrangements should provide for the effective and efficient execution of front, middle and backoffice functions.

A review of the current organisation structure for public debt management as well as interviews conducted with officials from MofpeD and BoU revealed that although attempts had been made to create an independent Directorate of Debt and cash Management to handle the public debt management functions, public debt management activities were still being implemented in a fragmented manner. Activities are still being handled in different departments of the Ministry. The roles and responsibilities of the different management units were still not clearly defined. there is neither a documented system for coordinating the activities of the Debt Management units at the technical level nor evidence of regular exchange of information among the DMUs.

This has been partly attributed to the delayed approval of the Public debt management framework, 2013.

Delays by MofpeD to define the roles and responsibilities of the different debt management units defeats the basic principal of adequate segregation of duties, leads to duplication, affects information sharing and creates challenges in coordination of management of public debt activities

Management Response

Following the enactment of the PFM Act, Government, through MoFPED, has drafted regulations which will clearly spell out the roles and responsibilities of key players in the debt issuance (front office), research and analysis (Middle Office) plus settlement, draw down and recording (Back Office). this will address the issue of fragmentation in debt management as these roles and responsibilities will also be clearly articulated in the MoFPED new structure. There has also been a delay in the approval of the new MoFPED structure by the Ministry of Public Service.

Audit Comment

MoFPED still operates a fragmented Debt management unit despite its attempts to create an independent Directorate of Debt and cash management. There was also no clarity and division of roles and responsibilities among the different DMUs. However efforts to come up with regulations which clearly spell out the roles and responsibilities of key players are commendable.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


RecommendationsMoFPED should:

• Expedite the consolidationof theDMU, aswell as finalize andapproveof theregulationsspellingouttherolesandresponsibilitiesofthedifferentunitswithintheDMU,clearlystatingthedifferentfunctionsofthefront,middleandbackdebtmanagementoffices.

• Ensurethatgovernmententitiesinvolvedinpublicdebtmanagementregularlyexchangeinformationandcloselycoordinatetheirrespectiveactivitiesinordertoensureaccuratereportingofdebtinformationtostakeholders.

4.4 BORROwING ACTIvITIES

4.4.1 Cost of domestic borrowingAccording to the Public Debt Management Framework 2013, the main strategic objectives for public Debt policy in Uganda are to meet Government’s financing requirements at the minimum cost, subject to prudent degree of risk, and to ensure that the level of public debt remains sustainable, both in the medium and long term horizon while being mindful of the future generations.

A review of the IMF Policy support instrument (PSI), December 2014 showed that the external and domestic debt stock stood at USD 4.18bn and USD 2.82bn, or 18% and 12% of GDP, respectively in FY 2013/14 as shown in Figure 7.

Figure 7 Domestic and External Financing as a % of GDp

Source: IMF, Third Review under the Policy Support Instrument, Dec 2014

* Estimate

** Projection

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Despite the domestic debt being a smaller share of total debt, it accounted for 78 per cent of debt service costs, due to the higher interest rates incurred (13.7% compared to an average of 2.0% for external debt).

The appropriate measure of the Uganda government domestic cost of borrowing is the yield to maturity (YTM), which relates the purchase price of the bond to the combined value of its redemption value and stream of interest payments in the form of an annualised interest rate. Figure 8 gives the yield to maturity for the different maturities of Treasury Bonds which have been auctioned since 01/01/2011. It shows that yields have reduced from their peak in 2011/12, a period characterised by inflation which peaked at 30.5 per cent, and which was widely ascribed to rapidly increasing world food and energy prices.25

Figure 8 Yield to Maturity in Uganda’s Treasury Bond Auctions, 2011-2015, (%)

Source: Treasury Bond Auction Results, Bank of Uganda

Based on the domestic bond auction data from BoU, the weighted average interest rate of the outstanding stock of domestic debt was estimated to be 13.7%26. This is relatively high when compared to other African countries with a similar credit rating (see Table 8)

25 A.Kabundi, Dynamics of inflation in Uganda, African Development Bank working paper26 Calculation carried out on 25/02/20 based on domestic bond auctions

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Table 8 Selected Treasury Bond Issues in B-Rated Sovereign, 2014

Issuer s&p Rating Maturity Issue Date Yield to maturity (%)

Uganda B+ 2 years 14/08/2014 13.0627

Cameroon B 2 years 11/08/2014 3.7528

Uganda B+ 5 years 06/11/2014 14.3929

Rwanda B 5 years 27/08/2014 11.8830

Despite the relatively high cost of domestic debt compared to external sources, the Ministry of Finance has not had much opportunity to limit its exposure to this market. the 2012 corruption scandal involving the prime Minister’s office resulted in a changed relationship between multilateral lenders to the Ugandan government and a consequent reduction in the amount of aid in the form of direct budget support. Budget support in 2011/12 amounted to USD 168m, but reduced to USD 24.1m in 2013/14. The shortfall has in part been filled through domestic financing.

Unusually high costs of debt in the domestic market could relate to a lack of competition amongst bidders. this is a possibility because of the relatively undiversified investor base in domestic debt. For instance, a single pension fund (the National Social Security Fund) holds 41 per cent of all government treasury bonds. The Domestic Financial Markets Unit of the BoU, which is charged with running the auctions, may refuse bids it deems to be speculative in nature. It has exercised this power – most recently in December 2014, turning down UGX 180bn worth of bids which it argued contained unacceptably high yields31. there are, however, limits to the volume of bids which can be cost-effectively refused in this manner, as this creates a financing shortfall which must be compensated for in other areas of the budget.

A plausible possibility may be that previous episodes of high inflation have caused bidders to build an inflation risk premium into the pricing of their bids, or a liquidity premium to reflect concerns about the liquidity of the bond market – especially for bonds of longer maturities. if this were the case, a period of low and stable inflation might reasonably be expected to exert a downward pressure on domestic interest rates over time. Equally, a more mature and liquid bond market might also reduce yields.

Management Response

There is a Primary Dealership System (PDs) that currently has 6 PDs who must meet a minimum capital requirement to qualify as PDs. Concerns have been raised over their failure to promote the secondary market as they tend to only buy and hold Bills/Bonds without trading. The scope of investor base is largely commercial banks, insurance companies and institutional investors such as pension funds and fund managers. Plans are underway to revise the PDs to explore means of increasing the investor base.

Secondly, Government is reforming the Pension sector as a means of increasing long term savings and widening the scope of institutional investors to enhance Uganda’s financial market.

27 https://www.bou.or.ug/bou/collateral/tbond_forms/2014/Aug/tbond_13AUG2014-2.html28http://www.africanbondmarkets.org/fileadmin/pdf/auctions_watch/central_africa/cameroon/results/2014/auction_results_tbonds_6th_August_2014.pdf29 https://www.bou.or.ug/bou/collateral/tbond_forms/2014/nov/tbond_5Nov2014-5.html30 source: http://www.bnr.rw/index.php?id=202&eiD=dam_frontend_push&dociD=131731 Source: Speculators defy BOU to drive shilling wild, The Observer, 11 January 2015

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


The comparison of different countries yields to maturities to that of Uganda needs to factor in the exchange rates variations at the time for the strength of different currencies; levels of inflation; and depth of the financial sector.

However, the recommendation on maintaining macroeconomic stability is noted.

Audit Comment

Interest rates on domestic debt have overall stabilised in recent years relative to their peak in 2011/12. However, they remain a cause for concern, due to their high contribution to overall debt service costs, and the relatively high yields which they attract stand in stark contrast to those achieved by comparator nations with similar credit ratings. Taking into consideration the relative inflationary levels however, the difference in yield-to-Maturity when considering Uganda and Cameroon is larger than would be expected from the inflation differential as shown in the table below.

Inflation Difference YTM Difference

2yr inflation Annualised Annualised

UG vs RwA32 5.3% 2.6% 2.5%

UG vs CAM n/a 5.6% 9.3%

This suggests that other factors (e.g. policy) are playing a part, indicating something that might be worth some more research from MoFPED – perhaps there is something that Cameroon is doing which they could emulate.

either way, the iMf medium-term assumption about Uganda’s real domestic debt cost is 6.7%. if the weighted-average cost is currently around 14%, and inflation holds to 5%, then Uganda’s domestic lenders are earning quite a hefty surplus profit (2.3%) on what the iMf thinks a reasonable yield should be. This should be a cause for concern for MoFPED if inflation stays stable, and the interest rate of new debt does not go down.

Given its challenging financing environment, the MofpeD has had limited choice over the scale of its domestic bond issuances. Efforts to improve the diversity and volume of bidders to promote meaningful competition amongst bidders for domestic debt which would place downward pressure on the cost of domestic debt are commendable.

32 The Infalation difference more or less exactly explains the difference between yield to maturity when considering Uganda and Rwanda

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Recommendations

• MofpeD should continue to promote an environment of low and stable inflation, to lower the inflation risk premium element which may be increasing bid values in domestic auctions.

• lowering barriers to participation and promoting bonds to potential investor groups and involving more external participation could be some other ways by which MoFPED could broaden investor participation in domestic bond

• there is also need to benchmark comparator nations with lower domestic costs with a view of informing macroeconomic policy and decision making

4.4.2 The Issuance of Debt for Short-Term Cash flow Needsthe issuance of debt of duration shorter than one year is a useful fiscal tool which can allow the re-profiling of irregular revenue streams into a steady cash flow profile which allows the in-year financial commitments of government to be serviced. efficient debt management in this context requires good institutional understanding of the cash balances within the government’s payment systems, as well as the timing and magnitude of the in-year commitments as they fall due. this type of forecasting is inevitably subject to measurement errors which arise due to uncertainty about the future; therefore efficient debt-management should also be responsive to sudden changes in cash flow requirements. Consolidating responsibility for cash and debt management into one organisational unit and operating a Treasury Single Account (TSA) is increasingly recognised as best practice in public financial management. 33 Recognised benefits include debt issuance decisions being made in the context of the government’s overall cash flows, which can produce considerable savings, and which limits the prospect of cash shortages leading to payment arrears or arbitrary cuts to government programmes.

Our interviews with MofpeD officials suggested that over the period 2011/12 – 2013/14, decisions around debt issuance for cash management purposes did not always reflect the totality of the Ugandan state’s cash balances. The lack of coordination between debt and cash management functions contributed to inaccurate forecasting of cash needs. This exacerbated the problem of unplanned cuts to government programmes and led to the needless issuance of short-term debt, with the associated debt service costs. the creation of the Treasury Single Account, for the central government accounts, in 2013/14, however, improved controls over cash management through reducing the number of accounts to monitor, and via the end-of-day cash sweep, allowing decision makers to more easily interpret the aggregate cash position for the whole of central Government.

However, through interviews with MofpeD officials, it was noted that local government authorities still held significant cash balances accrued from non-tax revenues and unutilised balances which were not remitted to the Consolidated Fund regularly, and that some accounts containing cash lay dormant, risking embezzlement.

Returns from various Districts for the period 2009/10-2013/14 also confirmed this picture, with non-negligible cash balances retained, and only returned to the treasury Consolidated fund at the end of the financial year (Figure 9). for instance, in 2013-14, with better financial management, UGX 113.2bn could have been remitted before year-

33 M.Cangiano, T.Curristine, M.Lazare (eds.), Public Financial Management and its Emerging Architecture, International Monetary Fund, 2013

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


end to alleviate short-term cash flow pressure in other areas of government. in that case, government would avoid/reduce on domestic borrowing and save on its associated high costs.

Figure 9: End-of Year Cash balances for Districts & Municipal Councils, 2009/10-

2013/14 UGX, Mn)

Management Response

A road map for Treasury Single Account (TSA) further rollout is in place pending initial approval with Development Partners for next phase. However the rollout for TSA to Local governments is dependent on them using IFMS, electronic banking arrangements etcetera which are still a challenge in most districts.

Audit Comment

The move to a Treasury Single Account and the creation of a new Directorate of Cash and Debt management are highly positive steps towards strengthening public financial management. Provided there is good communication between the staff carrying out debt and cash management functions within the new Directorate, there is a strong chance that future debt management will be more efficient than the legacy arrangements it has replaced. further benefits will be realised with the integration of lower local governments.

Recommendation• MofpeD should expedite the upgrade of its infrastructure to incorporate local

government and agencies within the tsA system, bringing greater financial controls and efficiency to cash management in these administrative units.

• MofpeD should formalize the debt and cash management functions and policy objectives of the Directorate of Cash and Debt management within the Public Debt Management framework and review the new Directorate in its first year to make sure it is working to achieve its policy goals as intended.

• in the future it may also be possible for MofpeD to earn an overnight financial return in the global money markets through investing surplus balances from the end-of-day cash sweep.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


4.4.3 Technical Evaluation of Terms of Borrowing.

The MoFPED debt management procedures stipulate that technical evaluations should be carried out for new borrowing proposals to analyse terms of the loans which are being acquired. This analysis involves comparing different loans and terms being offered, including the all in cost, as well as their impact on the currency composition, interest rate structure, and maturity profile of the overall loan portfolio.

From document review, it was noted that of the 35 sampled loans, only two (2) loan proposals had been technically evaluated and analysed by the middle office. these were for the construction of the soroti - Opuyo road and the 132KV Kampala – entebbe electricity Transmission. Moreover, despite the department advising against the acquisition of the loan for soroti - Opuyo road, given the terms provided due to its non-concessional nature, the MoFPED went ahead to secure the loan. Details of the original terms, the terms advised by Macro and the final terms are shown in table 9.

Table 9: Showing Comparisons between loan terms

CategoryOriginal terms

communicated to macroTerms advised by Macro Final terms

Loan Amount: US$ 120 million US$ 120 million US$ 120 million

Loan Period: 20 years Either 25 years 20 years

Grace period: 5 years 5 years 4 years

Interest Rate: Libor plus 155 bps Or Libor plus 100 bps Libor plus 155 bps

*Source: Soroti - Opuyo road Loan file and MoFPED Memo

Management attributed failure to evaluate all the loans to the fact that Government had for long contracted loans on concessional terms and thus the terms and the effects were well known. Furthermore, the Macroeconomic policy department was not provided with sufficient information by the front office to enable them carry out a comprehensive evaluation of the terms provided.

Without a technical evaluation of the all-in costs of the borrowing proposals, establishing the best borrowing option becomes difficult. it may be difficult for Government to ascertain whether it is borrowing at the least possible cost. Lack of technical evaluation could further lead to destabilisation of the National loan portfolio and threaten the sustainability of the debt as the debt managers are not fully aware of the implications of the new loans acquired.

Management Response

the middle Office ought not to be a clearing house for loans and especially some standard concessional loans that need not be subjected to regular rigorous assessment. the Middle office is a think tank to analyze cost and risk trade trade-offs of the entire portfolio.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Audit Comment

MoFPED did not carry out technical assessments of all new loan proposals and therefore compromised the National public Debt risk portfolio and sustainability. with the current trend of acquisition of non-concessional loans (short and medium term to the tune of 4.7billion USD) it is imperative that such technical evaluations are done for all new borrowing proposals to ensure that the National Debt remains sustainable in the medium and long term thus mitigating adverse effects of accumulated debt levels on the future generation.

Recommendation

MoFPED should put in place clear structures for Public debt management and clarify roles and responsibilities for carrying out technical evaluations of terms of borrowing.. It should thus ensure that technical evaluations are carried out for all new borrowing proposals prior to signing loan agreements.

Through technical evaluations MoFPED would establish benchmarks for what good VFM lending is and which lenders to approach in preference. The technical evaluations also enable management make informed decisions to ensure that the National Debt remains sustainable in the medium and long term.

4.4.4 Assessing the Economic Rate of Return (ERR)According to the public Debt Management framework (pDMf) 2013, Non-concessional loans should only be acquired for financing of projects that provide an economic rate of return greater than the interest rate charged. In order to achieve this, MoFPED should conduct assessments of the economic rate of return of all non-concessional loans before Government commits itself to borrow such loans.

from a review of loans worth UsD 816.946 million that had been secured on non-concessional terms during the period under review, it was noted that, no assessment was done to estimate the economic and financial rate of return of those loans. Details in Table 10.it was therefore difficult to ascertain whether the economic or financial return of the loans acquired would exceed the interest cost charged as required in the PDMF.

Table 10: List of Non-Concessional Loans committed since June 2013

LONGTITLE CREDITORMATURITY

(years)

GRACE

(years)

INTEREST

(% p.a.)

ORIGINAL-

Loan Currency

Equivalent in

USD

MUtUNDWe-

ENTEBBE

TRANSMISSION

liNe – KfW

GERMANY 15 3 4.50 15,000,000 20,242,915

NKeNDA-

HOiMA 132KV

TRANSMISSION

LINE

FRANCE 30 5 7.13 23,000,000 23,000,000

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


DRYLAND

INTEGRATED

DEVELOPMENT

PROJECT

IDB

15 7 2.50 15,000,000 15,000,000

OpUyO-

MOROtO 132KV

TRANSMISSION

LINE

15 4Libor34 +

155bp3580,620,000 80,620,000

tiRiNyi-

pAllisA-KUMi/

KAMONKOli

ROAD

15 4Libor +

155bp120,000,000 120,000,000

KAMpAlA-

ENTEBBE

EXPRESS

HIGHwA

CHINA

eXiM BANK

207 2.00

350,000,000 350,000,000

EqUIPMENT

SUPPLY TO

LOCAL GOVT

20 5 2.00 670,000,000 104,949,875

EqUIPMENT

sUpply tO KCC20 5 2.00 70,000,000 10,233,918

National

Backbone I20 5 2.00 240,000,000 31,496,063

National

Backbone II20 5 2.00 420,000,000 61,403,509

TOTAL 816,946,280

* Source: MoFPED

Management attributed its inability to conduct the assessments of Economic Rate of Return to capacity constraints given that the activity is technical in nature and requires specialist skills such as cost modelling which are lacking in the responsible Department. Besides, the relevant data for this activity is not readily available.

Without the assessment of the economic and financial rate of return for non-concessional loans, MofpeD cannot determine with precision the cost and benefit analysis of such borrowing. this may lead to acquiring of non- viable loans with their associated adverse implications of exerting pressure on future budgets and affecting the sustainability of national public debt.

Management Response

Capacity will be enhanced at the Middle Office as recommended but only to enhance the work of the project appraisal and ppp department and our assessment of non-concessional loans to better inform the Development Committee and Management.

34 The London Inter Bank Offer Rate which stood at 0.68% on 18/02/201535 Bp- Basis points, where 1bp = 1/100 of 1%

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Audit Comment efforts to enhance the capacity of the middle office are commendable but should not be limited to enhancing the work of the Project appraisal and PPP department. The Middle office should also be able to independently undertake assessments of the economic rate of Return (eRR) of the projects to be funded by non-concessional loans.

By not carrying out assessments for eRR of projects to be financed by non-concessional loans, Government risks acquiring non-viable loans which cannot contribute to payback of interest costs in the long run. Subsequently government resorts to diversions from other priority areas to finance such costs.

RecommendationMoFPED should:

• Build the capacity of the Middle office to enable it effectively and efficiently assess the economic rate of return of non- concessional loans before committing Government to borrow. This is particularly so, given that Government intends to continue borrowing on non-concessional terms in the short and medium term to the tune of UsD 4.7 billion over the next 2-3 years36.

• in additional to capacity building, utilize the results of the assessments for decision-making.

• improve coordination between the public debt management offices and put in place mechanisms to ensure that the middle office obtains relevant data from the front office to facilitate the assessment in question.

4.4.5 Feasibility Studies It is good practice for feasibility studies to be undertaken prior to acquisition of project financing. in Uganda, this role was delegated to the implementing agencies. However, a review of the 35 sampled loan files showed that no feasibility studies were conducted by the implementing agencies prior to the acquisition of loans. The Development Committee rather based its decision to finance the projects on concept papers and project appraisal documents prepared and submitted by the MDAs. It was further noted that the ministry did not carry out detailed appraisals of the projects proposals submitted to satisfy itself with their viability.

Management attributed this to lack of capacity within some line ministries to carry out detailed feasibility studies and laxity within the MoFPED to ensure that the feasibility studies were conducted and reports prepared before acquisition of loans. Furthermore the lack of appraisals was attributed to the fact that some development partners like the world Bank through IDA preferred to carry out their own appraisals. The MoFPED therefore viewed further appraisal as repetition thus opting not to carryout separate appraisals. instead all loans irrespective whether or not financed by World Bank have ended up not having feasibility studies. This therefore calls into question the criteria used by the committee to vet and approve projects.

Lack of detailed feasibility studies and appraisal of projects to check for viability is one

36pipeline projects for fy 2015/16 and the Medium term – Non-concessional

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


of the causes for delayed implementation of projects and none implementation of some resulting in low absorption of funds to the tune of USD 2,273.27 million as at December 2014 as shown in Table 11. The low absorptive capacity has led to an increase in the cost of the loans acquired as some of the creditors charge commitment fees. Appendix IV shows details of loans with absorption below 50%.

Table 11: Showing a Summary of Low absorption by Sectors in million USD as at December 2014.

Sector Number of Project Grant

Amount Committed

(m USD )

Disbursed

(m USD )

Undisbursed

(m USD )

Percentage Absorption

AGRICULTURE 3 - 193.50 76.20 117.30 39.38%

SOCIAL SECTORS 14 0.67 480.32 154.19 326.80 32.06%

TRANSPORT 10 - 985.24 257.67 727.57 26.15%

NATURAL RESOURCES 1 - 28.07 9.76 18.31 34.77%

ENERGY 10 9.00 408.14 76.21 340.94 18.27%

PRIVATE SECTOR DEVELOPMENT

3 - 115.82 2.35 113.47 2.03%

wATER SECTOR 5 - 463.23 58.86 404.37 12.71%

PUBLIC SECTOR MANAGEMENT 5 - 109.81 4.63 105.18 4.22%

LANDS 1 - 145.80 26.47 119.33 18.16%

TOTAL 52 9.67 2,929.94 666.33 2,273.27 22.67%

*Source: MoFpED Submission

Management ResponseThe initial feasibility studies must be undertaken by the respective Sectors. In addition, a separate Department (Project Analysis and PPP) has been established to ensure that sectors produce comprehensive project feasibility studies with detailed flows of expected benefits, which can be used to carry out any further financial analysis including the ERR.

The low absorption of funds is largely due to poor planning and implementation capacity.

Audit Comment

The duty of conducting feasibility studies is a delegated responsibility to the respective sectors (line ministries) which must be monitored by MoFPED.

MoFPED did not ensure that line ministries conduct detailed feasibility studies for projects submitted for funding (indicating the costs and benefits of the projects) to justify commitment of donor funds to these projects.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Lack of detailed feasibility studies is one of the causes of low absorption of funds. Out of a portfolio of 70 active loans, 55 loans (77.14%) had a low rate of absorption below 50% as at December 201437. this impedes the socio-economic transformation of the country.

Recommendation

• MofpeD should ensure that the new project Analysis and ppp unit coordinates with various MDAs to ensure feasibility studies are conducted prior to acquisition of loans in order to ascertain the viability of projects to be funded. There is also need to avoid contraction of new loans before old debts are fully absorbed to avoid incurring commitment fees for no economic return.

4.4.6 Timelines within the Debt Acquisition process According to the Macroeconomic and Financial Management Institute of East and Southern Africa guidelines, the Debt Management office should have documented procedures for all borrowing, defining how each stage of the process will be handled, roles and timing.

A review of the MoFPED approved procedure for acquisition of loans showed that whereas the borrowing process was well documented and reflected roles and responsibilities, it lacked timelines within which the stated activities should be carried out.

The absence of timelines has led to delays in the acquisition of funds from potential financiers as the various activities within the loan acquisition process were dragged for long periods hence causing delays in execution of projects. Appendix V shows details of delays by various players. The biggest delays were noted in Parliament and Attorney General where the approval of the loan agreements took between 17 to 336 days and between 14 to 534 days, respectively. It was also noted that the time taken (duration) between submission of loan agreements to the solicitor General and their submission to the Attorney General ranged from 141 to 769 days.

We were unable to ascertain the time taken between identification of a potential lender (financier) up to approval of the loan agreements by the solicitor General as the loan files availed did not contain all the relevant information for the different stages of the process.

This is attributed to weaknesses in the legal framework that does not provide for indicative dates for loan acquisition activities from project inception to identification of financing sources through to approvals and the subsequent signing of the loans.

lack of timelines within the loan acquisition process and procedures makes it difficult to carry out checks and balances and ensure activities are executed in a timely and orderly manner.

Management Response

The recommendation is noted and MoFPED will develop indicative timelines for the External Debt acquisition process. However, it is important to note that MoFPED cannot fully influence operations of key players in the process that is Ministry of foreign Affairs of Bilateral Agencies, Boards of Multilaterals, Parliament, and Solicitor General etcetera. However MoFPED will continue collaboration to ensure reduction /minimization of delays in the loan approval process.

37 Report on loans with performance below 50% submitted by PS/ST

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Audit Comment MoFPED did not come up with clear timelines for the initiation and completion of each stage of the loan acquisition cycle. Approvals have in some instances taken up to 2 years. Delays affect the viability of projects as the social, economic and political factors that prevailed at project conception could have been overtaken by events (changed) at the time of loan acquisition.

Recommendation

MoFPED should:

• Review the current debt acquisition process and through regulations or guidelines, come up with indicative dates/periods for each borrowing activity in order to ensure timely acquisition of loans. Timely processing of loans will enable Government maximize loan benefits and thus achieve Value for Money for the loans acquired.

• liaise with the key stakeholders (Cabinet, parliament, solicitor General, and Attorney General) to find ways of reducing/minimizing delays in the loan approval process.

OvERALL AUDIT CONCLUSIONThe MoFPED has conducted a prudent policy of acquiring new debt since 2007 which minimises risks. it has, for instance, chosen not to issue non-concessional debt in a foreign currency, and is continuing to extend the average maturity of domestic debt by issuing 15 year debt. It also continues to prioritise the acquisition of cheaper concessional loans in preference to the more expensive domestic borrowing. These policy measures have contributed to sustainability projections which indicate that the country faces a low probability of debt distress in the short to medium term, even under challenging external macroeconomic and financing environments.

Nonetheless with the current economic conditions characterised by reduced exports and a depreciating Ugandan Shilling against the dollar (30% for the last 4 months) there is a risk of stress which can affect future sustainability. Interest rates on domestic debt remain a cause for concern due to their high contribution to overall debt service costs (78%), and the relatively high yields which they attract stand in stark contrast to those achieved by comparator nations. The full implementation of the plan to consolidate the debt management functions and the roll out of the TSA should lead to improvement in management of the public debt.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


AppENDIX I: SAMpLED LOANS

S/NCreditor/

DonorProject Title

GoU Sector/

sub-sector

Ministry/

Implementing

Agency

1 AfDBMarkets and Agricultural Trade

improvement project i (MAtip-i)Multi-sectoral MoLG

Rural Income and Employment

enhancement ProjectFinancial MFSC

2BADEA

Masaka – Bukakata Transport UNRA

Rural electrification project Energy MEMD/REA

Urban Markets and Marketing

Development of the Agricultural

products project - lot ii

Agriculture MoLG

Construction of Technical Institute at

NakasekeEducation MoES

URBAN MARKets & MARKet’G DeVt

N.Eastern Towns water and

Sanitation Projectwater MwE

Line of Credit to UDBL Private UDBL

3

CHINA EXIM

BANK

Entebbe Express HighwayWorks &

TransportUNRA

Uganda Equipment supply to Local

Governments

Works &

TransportMolG/ KCCA

National Transmission Backborne II Technology MoICT

KCC Road Unit and sanitary

Equipment

Works &

TransportKCCA

4

EIBKampala water lake Victoria WAtsAN

Project

Water &

sanitationNwSC

EIB

Dualling of Kampala Northern By

Pass and Construction of Mbarara By

pass

Transport UNRA

5 FRANCE – AFDKampala water lake Victoria WAtsAN

Project

Water &

sanitationNwSC

6 GermanyMutundwe – Entebbe Transmission

lineEnergy UETCL,REA

7 IDA

Electricity Sector Development

ProjectEnergy MoEMD/UETCL

Avian and Human influenza

Preparedness and Response ProjectMulti-sectoral

MOH,

MAAIF

APPENDICES

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


S/NCreditor/

DonorProject Title

GoU Sector/

sub-sector

Ministry/

Implementing

Agency

8 IDB

Food Security through Increased Rice

ProductionAGRICULTURE MAAIF

Dry Lands integrated Development

Project

Multi-sector

projectsOPM

Development of Specialised Maternal

& Neonatal Health Unit in Mulago -

Mulago iii (iDB loan No.UG-077 & 80)

HEALTH MoH

National Education Support Project

– Phase II for National Technical

Colleges (Bushenyi, Kichwamba and

Kyema)

Education MoES

National Education Support Project

phase 1 UG-0071Education MoES

Construction of Small Briges in

Northern Uganda, and North Eastern

Uganda

works MoW&t

Rural Income and Employment

enhancement ProjectFinancial MFSC

Millennium Villages ProjectMulti-sector

projectsDevelopment of Specialised Marternal

& Neonatal Healthcare Unit in Mulago

- Mulago iii - installment sale UG-078

HEALTH MoH

Community Agricultural

Infrastructure Improvement Prog III

(CAIIP III)

Agriculture -

MoLGMoLG

Opuyo - Moroto 132Kv transmission

lineEnergy UETCL,REA

31 IDB/ISFD

Development of Specialised Marternal

& Neonatal Health Unit in Mulago -

Mulago III

(isfD loan No.UG-077

&80)

HEALTH MoH

9 KUWAit fUNDConstruction and equipping of 4

Technical institutions No. 849Education MoES

10OfiD-OpeC

Fund

Energy Development and Acess

Expansion

project in 7 towns - 1484p

Energy MEMD

11 OPEC Masaka – Bukakata Transport UNRA

12 OPEC FUNDConstruction and equipping of BTVET

institutions No. 1317PEducation MoES

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


AppENDIX II: DOCUMENTS REvIEw

CATEGORY DOCUMENTS REVIEWED PURPOSE(S) OF REVIEW RESULTS OF THE REVIEW

Legislation

ConstitutionTo ascertain the Mandate for public debt management

Article 159 outlines the Power of Government to borrow or lend. It states that Government may borrow from any source. It also stipulates that all loans and borrowing should be approved by parliament and that the president shall cause to be laid before parliament a report on the national indebtedness.

Article 160 provides the definition of public debt and that it shall be a charge on the consolidated fund.

Treasury Bills Act

To understand the Framework for raising domestic debt for Fiscal purposes.

S.1 authorises the minister for finance to borrow by way of issue of Treasury bills in Uganda a sum of which not exceeding a total of 22bn shillings

It also states that the proceeds will be paid into the consolidated fund.

Bank of Uganda Act To establish the role of BoU in public debt

S.4 (2)(a) points out one of the roles of the bank as acting as a financial adviser to Government and manager of public debt.

Budget Act

To ascertain the regulatory framework for planning and reporting of debt

S.13 sets out a requirement for MoFPED to report on total indebtedness to parliament.

S.14 sets out guidelines for raising domestic debt by MDA

Public Finance and Accountability Act

To determine who has the Authority to raise money by loan on behalf of Government

Part III sets out the legal guideline for raising loans, issuing Guarantees and receiving Grants. It further vests the authority raise loans, issue Guarantees and receive grants solely in the Minister for Finance.

ISSAIs on Public Debt

To ascertain the guidelines for audit of public debt

ISSAI 5411 presents Vulnerability, sustainability and financial debt indicators that can help a SAI assess the country’s public debt status. ISSAI 5420 on the other hand presents Guidance on Definition and Disclosure of Public Debt to help auditors understand the various terms used in public debt management.

ISSAI 5422 provides guidelines for carrying out a performance audit on public debt.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Guidelines

Guidelines for Public Debt Management (IMF)

Best practice in public debt management

It presents guidelines for public debt management with regard to; Debt Management Objectives and Coordination, Transparency and Accountability, Institutional Framework, Debt Management Strategy, Risk Management Framework, and Development and Maintenance of an efficient Market for Domestic Government Securities

Public Debt Management Framework 2013

To understand the framework for public debt management in Uganda

It presents Uganda’s public debt management strategy for five 5years starting 2013. The framework also outlines the national objectives for public debt management, presents quantitative bench marks the guide accumulation of debt, it presents liquidity and solvency ratios above which public debt shouldn’t rise.

the framework further amplifies the context of Uganda’s National debt, the parameters to be used for management of both domestic and external debt and the institutional and legal framework for debt management.

DeMPA toolTo gain an understanding of how public debt management is assessed

Lays outs 15 debt performance indicators against which national public debt management can be assessed.

MEFMI

To understand the different dimension for carrying out an performance audit on public debt

MEMFI presents the loan cycle highlighting the keys stages that new loans undergo. It also presents areas that are crucial in the stage to which auditors should pay keen attention. These include; the legal framework, institutional framework, assessment of borrowing needs, borrowing activities, debt reporting, debt servicing among others.

Reports

Uganda Debt Sustainability Report (CY 2011 – 2013)

To appreciate Uganda’s stock of public debt and its sustainability

It presents an assessment of how Uganda’s current level of public debt and prospective new borrowing would affect its ability to service its debt in the future

Report on Public Debt, Grants and Guarantees (FY 2010/11 – 2013/14)

to establish status & composition of public debt annually.

The Report on Public Debt, Grants and Guarantees presents a holistic coverage of the national debt portfolio, it also gives a breakdown of the debt by source and sector

Performance of the Economy Report

To ascertain the performance of public debt repayment

The PoER presents the planed interest payment and the actual interest payment in a given year. It also presents an explanation for the variance if any.

Reports on Debt from UDN

To understand the view of the civil society with regard to how public debt is managed

The reports present the civil society’s perspective of how the national debt is being managed.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


AppENDIX III: INTERvIEwS CONDUCTED

Unit Officer/ DesignationPurpose of the Interviews

to ascertain/get/Understand:-

psst Office MofpeDPermanent Secretary/Secretary to the Treasury

why the current situation exists with regard to acquisition of public debt and the initiatives being undertaken to rectify the problems face in debt acquisition.

psst Office MofpeD Technical Advisor to the PSST

The role of the Advisor and the proposed initiative to improve public debt management.

Directorate of Economic Affairs Director

The role of the Directorate of Economic Affair with regard to formulation of the Public Debt management framework, the debt sustainability analysis and acquisition of public debt

Budget Directorate DirectorThe role of the Budget directorate in debt acquisition, the challenges faced, why they exist and possible solutions

Debt & Cash Management Unit Director & staff

The structure of the new directorate, it roles and responsibilities and plans to improve the current debt acquisition process

Aid Liaison Department (MoFPED) Commissioner & staff

Role in Debt Management, Organisation of Debt management (other key stakeholders), Procedure for acquisition of Loans (process therein), Number of loans negotiated and terms for period under review, Number and cost of new loans for current FY, Challenges and Suggested solutions.

Treasury Services Department (MoFPED) Commissioner & staff

Role in Debt Management, Organisation of Debt management (other key stakeholders), Current stock of Debt, Process for Debt reconciliation, Challenges, and Suggested solutions.

Macroeconomic Policy Department (MoFPED) Commissioner & staff

- Role in Debt Management

- Organisation of Debt management (other key stakeholders)

- Relationship with and role of BoU

- Mechanisms to ensure debt sustainability

- Challenges

- Suggested solutions.

BoU (fiscal sector & Government Finance Statistics Department)

Director & staffThe Role of the Department in debt management, how the roles differ from those of finance, and how the two coordinate.

BoU (Financial Markets Department) Director & staff

Role of BoU in Debt Management, role of the department, the processes for acquisition of domestic debt, challenges faced and possible solutions.

Development Partners African Development Bank (ADB), world Bank (wB), and European Union

ADB Principle Country Programme Officer, Chief Country economist & senior Economist, EU Ambassador & Head of Delegation, and Staff and wB Senior operations Officer & senior country Economist

Take on Uganda debt management, their view on the key areas of concerns with the acquisition process and key factors threatening the sustainability of Uganda public Debt.

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Ap

pEN

DIX

Iv: L

Ow

AB

SOR

pTI

ON

pR

OJE

CTS

DET

AIL

S O

F p

RO

JECT

wIT

h A

BSO

Rp

TIO

N B

ELO

w 5

0%

Creditor/DonorProjectTitle

Ministry/ImplementingAgency

DateofEffectiveness

GRANTamountcommitted(US$

m)

LOANAmountCommitted(US$

m)

DisbursedasatDec2014(US$m)

Undisbursedtodate(US$m)

%Disbursed

AG

RIC

ULT

UR

E SE

CTO

R

1ID

AUgandaAgricTechnologyandAgriBusinessAvisory

Services(ATAAS)

MAA

IIF22-Dec-11

126

58.40

67.6

46%

2IF

ADUgandaAgricTechnologyandAgriBusinessAvisory

Services(ATAAS)

MAA

IF22-Dec-11

14.6

4.0

10.6

27%

3IF

ADVegatableOilDevelopmentProjectPhaseII

MAA

IF21-Oct-10

52.90

13.80

39.10

26%

TOTA

L A

GR

ICU

LTU

RE

0.00

193.

5076

.20

117.

3039

%

SOCI

AL

SECT

OR

S -

hEA

LTh

AN

D E

DU

CATI

ON

4AfDB

HigherEducation,SceinceandTechnologyProject

(HEST)

MoE&S

05-Sep-13

102.00

1.34

100.66

1.3%

5AfDB

NigeriaTF-ImprovementofhealthServicesat

MulagoandKCC

MoH

02-Jul-12

15.82

15.82

0.0%

6AfDB

ImprovementofhealthServicesatMulagoandKCC

MoH

02-Jul-12

72.78

7.21

65.57

9.9%

7IDB

DevelopmentofSpecialisedMarternal&Neonatal

HealthUnitinMulago-MulagoIII(IDBLoan

No.UG-077&80)

MoH

04-Feb-13

0.44

19.77

0.52

19.69

3%

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


8IDB/ISFD


HealthUnitinMulago-MulagoIII(ISFDLoan

No.UG-077&80)

MoH

04-Feb-13

2.20

0.00

2.20

0%

9IDB


HealthcareUnitinMulago-MulagoIII-Installment

SaleUG-078

MoH

04-Feb-13

8.31

0.00

8.31

0%

10ID

APostPrimaryEducationandTrainingProject-4570-

UG

MoE

05-Nov-09

154.20

135.60

18.60

88%

11IDB

NationalEducationSupportProject-PhaseIIfor

NationalTechnicalColleges

MOES

14-Aug-12

14.1

14.10

0%

12IDB

NationalEducationSupportProjectPhase1UG-0071

MOES

14-Sep-10

0.23

12.72

3.19

9.76

25%

13KOREA

ComplementaryFinancingforBTVET

MOES

06-Feb-13

26.8

026.80

0%

14SAUDI

FUND

FinancingoffiveBTVETinstitutions

MOES

05-Jul-10

11.77

0.53

11.24

5%

15O

PEC

FUND

ConstructionandequippingofBTVETinstitutions

No.1317P

MOES

05-Jul-10

22.95

5.80

17.15

25%

16Kuwait

Fund

Constructionandequippingof4Technical

institutionsNo.849

MOES

19-Feb-13

11.9

0.00

11.90

0%

17BADEA

CconstructionofTechnicalInstituteatNakaseke

MOES

14-Aug-12

5.00

0.00

5.00

0%

TOTA

L SO

CIA

L SE

CTO

RS

0.67

480.

3215

4.19

326.

8032

%

TRANSPORT

18IDB

Tirinyi-Pallisa-Kumi/KamonkoliRoad

UNRA

120.00

19ID

ATransportSectorDevelopmentProject

MoW&T

&UNRA

15-Jul-10

256.54

113.30

143.24

44%

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


20CHINA-

EXIM

BANK

EntebbeExpressHighway

UNRA

22-May-12

350.0

122.2

227.8

35%

21IDB

ConstructionofSmallBrigesinNorthernUganda,

andNorthEasternUganda

MOW&T

01-Dec-10

10.64

0.54

10.11

5%

22JAPAN

-JBIC

ConstructionofNewBridgeAcrossRiverNile

UNRA

25-Jul-11

111.65

17.377

94.28

16%

23JAPAN

-JBIC

UpgradingofAtiak-NimuleRoadProject

MOW&T

01-Dec-10

37.42

4.26

33.16

11%

24EIB

DuallingofKamaplaNorthernByPassand

ConstructionofMbararaBypass

UNRA

04-May-10

71.99

071.99

0%

25BADEA

Masaka-Bukakata

UNRA

01-Jul-14

12.00

012.00

0%

26O

PEC

Masaka-Bukakata

UNRA

28-Oct-13

15.00

0.00

15.00

0%

27TOTALTRANSPORT

-985.24

257.67

727.57

26%

NATURALRESOURCES

30ID

ALakeVictoriaEnvironmentManagementProjectII-

4531-UG

MoW

&E

25-Jan-10

28.07

9.76

18.31

35%

TOTA

L N

ATU

RA

L R

ESO

UR

CES

-28

.07

9.76

18.3

135

%

ENER

GY

31AfDB

BujagaliInterconnectionProject

MEM

D23-Apr-08

29.10

25.68

3.42

88%

32IDB

Opuyo-Moroti132KVTransmissionLine

MEM

D17-Sep-14

80.62

0.00

80.62

0%

33AfDB

Mbarara-Nkenda&Tororor-LiraPower

Transimissionlines

MEM

D18-Feb-11

79.80

27.88

51.92

35%

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


34AfDB

NELSAP-InterconnectionofElectricGridsofNile

EquatoriallakeCountries(Ug,Rw,Br,Kenya,DRC)

MEM

D04-Jul-11

11.53

2.56

8.97

22%

35GEF-IDA

GEFEnergyforRuralTransformation

MoE&MD/

REA

25-Nov-09

9.00

4.29

4.71

48%

36ID

AElectricitySectorDevelopmentProject

MoEMD/

UECTL

23-Oct-12

116.51

2.41

114.10

2%

37BADEA

RuralElectrificationProject

MEMD/

REA

2-Sep-11

10.0

0.1

9.949

0%

38JAPAN

-JICA

InterconnectionofElectricGridsOfNileEquatorial

LakesCountriesProject

MoE

MD

1-Dec-10

59.58

13.34

46.24

22%

39SAUDI

FUND

RuralElectrificationProject

MEM

D13-Apr-11

11.0

011.0

0%

40O

FID

-OPEC

Fund

EnergyDevelopmentandAcessExpansionProjectin

7towns-1484P

MEM

D28-Aug-13

10.0

010.0

0%

TOTA

L EN

ERG

Y9.

0040

8.14

76.2

134

0.94

18%

PRIVATESECTORDEVELOPMENT

41ID

ACompetitivenessandEnterpriseDevelopment

6-Jun-14

101.62

1.63

99.99

2%

42BADEA

LineofCredittoUDBL

UDBL

12-May-09

4.50

0.22

4.28

5%

43IDB

RuralIncomeandEmploymentenhancementProject

MFSC

16-Aug-10

9.7

0.5

9.20

5%

TOTALPRIVATESECTORDEVELOPMENT

-115.82

2.35

113.47

2%

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


wAT

ER S

ECTO

R

44AfDB

WaterSupplyandSanitationProgramme

MWLE-

DW

D29/09/2012

63.29

25.83

37.46

41%

45AfDB

KampalaSanitationProgrammePhaseI

KCC

18-Feb-10

53.19

15.43

37.76

29.0%

46FRANCE-

AFD

KampalawaterLakeVictoriaWATSANProject

NWSC

9-Jul-12

108.18

7.79

100.39

7%

47EIB

KampalawaterLakeVictoriaWATSANProject

NWSC

18-Feb-10

108.18

0108.18

0%

48ID

AWaterManagementandDevelopmentProject

MWE,

NWSC

12-Aug-13

130.39

9.809

120.58

8%

TOTA

L w

ATER

SEC

TOR

046

3.23

58.8

5940

4.37

13%

PublicSectorManagement

49AfDB

CommunityAgriculturalInfrastructureImprovement

ProgIII(CAIIPIII)

MoL

G22-Feb-12

62.11

2.42

59.69

4%

50BADEA

UrbanMarketsandMarketingDevelopmentofthe

AgriculturalProductsProject-LotII

MoL

G21-Jan-10

10.00

0.04

9.96

0%

51IDB

CommunityAgriculturalInfrastructureImprovement

ProgIII(CAIIPIII)

MoL

G04-Feb-13

8.00

0.17

7.83

2%

52IDB

DryLandsintegratedDevelopmentProject

OP

M25-Feb-14

20.00

0.00

20.00

0%

53IDB

MillenniumVillagesProject

01-Jan-14

9.70

2.00

7.70

21%

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


TOTA

L p

UB

LIC

SECT

OR

MA

NA

GEM

ENT

-10

9.81

4.63

105.

184%

LAN

DS,

hO

USI

NG

& U

RB

AN

DEv

ELO

pM

ENT

54ID

AMunicipalInfrastructureDevelopment

MoLH&UD

145.80

26.47

18%

TOTALLANDS

-145.80

26.47

119.33

18%

Total

2,929.94

666.33

2,273.27

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


Ap

pEN

DIX

v: T

IME

FRA

ME

FOR

LO

AN

Ap

pR

OvA

LSN

o.C

redi

tor

Pro

ject

Nam

e

&

Loan

Am

ount

Dat

e Se

nt

to C

abin

etD

ate

of

Cab

inet

App

rova

l

No.

of

Day

s sp

ent i

n C

abin

et

No

of

Day

s sp

ent

wit

h So

licit

or

Gen

eral

Dat

e se

nt to

P

arlia

men

tD

ate

of

Par

liam

enta

ry

App

rova

l

No.

of D

ays

spen

t in

Par

liam

ent

Dat

e of

Att

orne

y G

ener

al’s

O

pini

on

Day

s el

apse

d fr

om d

ate

of

App

rova

l by

F.I t

o da

te o

f A

ppro

val b

y P

arlia

men

t

1.

AFDB

Marketsand

Agricultural

Trade

Improvement

ProjectI

(MATIP-I)

7.05.09

22.07.09

7626-6.09

-13.10.09

(110)

13.08.09

9.12.09

2723.12.09

(14)

227

2.Rural

Incomeand

Employment

enhancement

Project

11.12.09

21.12.09

1026-6.09

-13.10.09

(109)

22.12.09

18.05.10

147

24.06.10

(37)

303

3.Community

Agricultural

Infrastructure

Improvement

ProgIII(CAIIP

III)

16.05.11

15.06.11

3027.07.11

2.11.11

9814.12.11

183

4.

ADF

Improving

HealthAt

Mulago&

Kampala

ID-21561000

UA46,000,000

23.08.11

14.09.11

22

11.10.11

15.02.12

127

224

5.BADEA

Masaka-

Bukakata

11.10.12

19.12.12

387.11.12-

22.11.12

(15)

16.01.13

21.05.13

125

4.07.13

(43)

221

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


No.

Cre

dito

r

P

roje

ct

Nam

e

&

Loan

Am

ount

Dat

e Se

nt

to C

abin

etD

ate

of

Cab

inet

App

rova

l

No.

of

Day

s sp

ent i

n C

abin

et

No

of

Day

s sp

ent

wit

h So

licit

or

Gen

eral

Dat

e se

nt to

P

arlia

men

tD

ate

of

Par

liam

enta

ry

App

rova

l

No.

of D

ays

spen

t in

Par

liam

ent

Dat

e of

Att

orne

y G

ener

al’s

O

pini

on

Day

s el

apse

d fr

om d

ate

of

App

rova

l by

F.I t

o da

te o

f A

ppro

val b

y P

arlia

men

t

6.SAUDI

FUNDFOR

DEVELOPMENT

Rural

Electrification

Project

28.10.10

1.12.10

3424.06.10

4.01.11

27.04.11

113

24.06.11

(59)

206

7.BADEA

Rural

Electrification

Project

28.10.10

1.12.10

3427.04.11

2.05.11

0526.12.11

(208)

247

8.BADEA

UrbanMarkets

andMarketing

Developmentof

theAgricultural

Products

Project-LotII

7.05.09

22.07.09

76

10.06.09-

24.06.09

(14)

13.08.09

9.12.09

118

23.12.09

(16)

224

9.BADEA

Construction

ofTechnical

Instituteat

Nakaseke

19.04.11

17.08.11

120

27.06.11

12.09.11

18.05.12

187

11.07.12

(54)

14.08.12

Effectivedate

394

10.EIB

Kampalawater

LakeVictoria

WATSAN

Project

3.01.11

5.04.11

27.04.11

2211.12.11

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


No.

Cre

dito

r

P

roje

ct

Nam

e

&

Loan

Am

ount

Dat

e Se

nt

to C

abin

etD

ate

of

Cab

inet

App

rova

l

No.

of

Day

s sp

ent i

n C

abin

et

No

of

Day

s sp

ent

wit

h So

licit

or

Gen

eral

Dat

e se

nt to

P

arlia

men

tD

ate

of

Par

liam

enta

ry

App

rova

l

No.

of D

ays

spen

t in

Par

liam

ent

Dat

e of

Att

orne

y G

ener

al’s

O

pini

on

Day

s el

apse

d fr

om d

ate

of

App

rova

l by

F.I t

o da

te o

f A

ppro

val b

y P

arlia

men

t

11.EIB

Duallingof

Kampala

Northern

ByPassand

Construction

ofMbararaBy

pass

July2012

5.09.12

50

29.04.13

8.10.12

04.04.13

177

19.06.13&

7.03,14

(261)

488

12.

IDA

Electricity

Sector

Development

Project

8.11.11

7.03.12

7029.08.12

16.04.12

2.08.12

108

28.08.12

(26)

204

13.

IDA

Avianand

Human

Influenza

Preparedness

andResponse

Project

November

0818.02.09

104

23.03.09

23.09.09

230

16.10.09

(23)

357

14.KUWAITFUND

Construction

andequipping

of4Technical

institutionsNo.

849

13.12.11

21.03.12

98

7.11.12-

5.02.13

(60)

16.04.12

31.10.12

288

4.02.13

(96)

542

15.OFID-OPEC

Fund

Energy

Development

andAccess

Expansion

Projectin7

towns-1484P

12.04.12

2.05.12

20

9.12.12-

30.01.13

(52)

7.06.12

31.10.12

146

6.02.13-

31.05.13

(114)

332

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


No.

Cre

dito

r

P

roje

ct

Nam

e

&

Loan

Am

ount

Dat

e Se

nt

to C

abin

etD

ate

of

Cab

inet

App

rova

l

No.

of

Day

s sp

ent i

n C

abin

et

No

of

Day

s sp

ent

wit

h So

licit

or

Gen

eral

Dat

e se

nt to

P

arlia

men

tD

ate

of

Par

liam

enta

ry

App

rova

l

No.

of D

ays

spen

t in

Par

liam

ent

Dat

e of

Att

orne

y G

ener

al’s

O

pini

on

Day

s el

apse

d fr

om d

ate

of

App

rova

l by

F.I t

o da

te o

f A

ppro

val b

y P

arlia

men

t

16.

OP

EC

Masaka-

Bukakata

11.10.12

19.12.12

6916.01.13

21.10.13

278

10.09.13

28.10.13

354

17.

Construction

andequipping

ofBTVET

institutionsNo.

1317P

5th .01.10-

10.01.10

(05)

27.01.10

18.05.10

111

24.06.10

(36)

152

18.

ChinaExim

Bank

Entebbe

Express

Highway

4.01.11

25.03.11

141

30.03.11

4.04.11

28.04.11

2431.05.11

(33)

141

19.ChinaExim

Bank

Uganda

Equipment

supplytoLocal

Governments

15.09.09

14.04.10

211

23.09.11-

28.09.11

(05)

26.04.10

13.05.10

1717.11.11

(536)

769

20.ChinaExim

Bank

KCCRoadUnit

andSanitary

Equipment

6.11.07

7.04.08

15.04.08

38

21.IDB

FoodSecurity

through

IncreasedRice

Production

17.10.12

17.01.13

2.12.13

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


No.

Cre

dito

r

P

roje

ct

Nam

e

&

Loan

Am

ount

Dat

e Se

nt

to C

abin

etD

ate

of

Cab

inet

App

rova

l

No.

of

Day

s sp

ent i

n C

abin

et

No

of

Day

s sp

ent

wit

h So

licit

or

Gen

eral

Dat

e se

nt to

P

arlia

men

tD

ate

of

Par

liam

enta

ry

App

rova

l

No.

of D

ays

spen

t in

Par

liam

ent

Dat

e of

Att

orne

y G

ener

al’s

O

pini

on

Day

s el

apse

d fr

om d

ate

of

App

rova

l by

F.I t

o da

te o

f A

ppro

val b

y P

arlia

men

t

22.IDB

DryLands

integrated

Development

Project

10.05.13

05.06.13

26

29.04.13-

20.05.13

(21)

22.07.13

6.11.13

107

16.01.14

(71)

225

23.

IDB

National

Education

Support

ProjectPhase

IIforNational

Technical

Colleges

(Bushenyi,

Kichwamba

andKyema)

16.05.11

27

13.06.11-

27.06.11

(14)

Sept2011

18.05.12

4811.07.12

(53)

142

24.

IDB

National

Education

SupportProject

Phase1UG-

0071

7.06.10-

27.06.10

(20)

8.02.10

18.05.10

9930.07.10

(72)

191

25.

IDB

Rural

Incomeand

Employment

enhancement

Project

11.12.09

21.12.09

10

26.06.09-

13.10.09

(109)

22.12.09

18.05.10

147

24.06.10

(66)

332

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T


No.

Cre

dito

r

P

roje

ct

Nam

e

&

Loan

Am

ount

Dat

e Se

nt

to C

abin

etD

ate

of

Cab

inet

App

rova

l

No.

of

Day

s sp

ent i

n C

abin

et

No

of

Day

s sp

ent

wit

h So

licit

or

Gen

eral

Dat

e se

nt to

P

arlia

men

tD

ate

of

Par

liam

enta

ry

App

rova

l

No.

of D

ays

spen

t in

Par

liam

ent

Dat

e of

Att

orne

y G

ener

al’s

O

pini

on

Day

s el

apse

d fr

om d

ate

of

App

rova

l by

F.I t

o da

te o

f A

ppro

val b

y P

arlia

men

t

26.

Community

Agricultural

Infrastructure

Improvement

ProgIII(CAIIP

III)

16.05.11

15.06.11

30

22.03.12-

26.04.12

(35)

27.07.11

27.06.12

336

29.08.12-

19.11.12

(82)

483

27.

Opuyo-

Moroto132Kv

Transmission

line

10.05.13

12.06.13

3222.07.13

8.10.13

7816.01.14

(99)

209

28.

IDB/ISFD

Development

ofSpecialised

Marternal

&Neonatal

HealthUnit

inMulago-

MulagoIII

(ISFDLoan

No.UG-077

&80)

18.01.12

40

22.03.12-

26.04.12

(35)

16.02.12

31.07.12

165

16.10.12-

19.11.12

(34)

274

VA

LU

E F

OR

MO

NE

Y A

UD

IT R

EP

OR

T



OFFICE OF THE AUDITOR GENERALOFFICE OF THE AUDITOR GENERAL

P.O. Box 7083, Kampala.Tel. +256 414 344 340 Fax: +256 417 336 000

E-mail: [email protected],go.ug

the republic of uganda - oag … · it is expected that the harmonization of debt and cash...

Documents