Government has withdrawn a total of Shs200 billion from the Petroleum Fund to finance the spending plans for the Financial Year 2018/19 that ends in June.
The Petroleum Fund, where revenue from all petroleum-related activities is deposited, had grown to Shs422.9 billion as at December 31, 2017, mainly from payment of Capital Gains Taxes (CGT) by Anglo-Irish Tullow Oil.
Government is implementing a 32.7 trillion-shilling budget for 2018-19, partly to fund development of power plants and roads. That contributed to a fiscal deficit of 6.6 percent of gross domestic product this year, leaving the government with the need to raise funds from elsewhere to plug the gap.
So far the country is spending more than a third of its nascent Petroleum Fund before it produces any oil. TheMinistry of Finance audit report of the Fund published on Tuesday showed that the Fund had a balance of Shs288 billion as at end of December 2018.
The Accountant General Lawrence Semakula said on yesterday that, “We have all these priorities such as financing infrastructure, so what do we do when we have a deficit? Rather than going out to borrow, we would rather use some money from the Fund.”
He also revealed that when Uganda eventually starts commercial oil production, the current withdrawals will be “offset” and the “Fund better managed”.
According to Daily Monitor, the Fund has two objectives: financing the Budget and saving/investment for the future generations.
The Public Finance Management Act [PFMA[ 2015 further indicates that withdrawal of funds to cater for development expenditure and not recurrent expenditure will be through Parliamentary approval on a year-by-year basis. During the previous Financial Year 2017/2018, the government withdrew Shs125.6b from the Fund in November 2017.