The Secretary to Treasury, Ramathan Ggoobi (pictured) has warned Accounting Officers in Ministries, Departments and Agencies (MDAs) against undertaking contracts in foreign currencies, especially in United States Dollars and Euros, saying the move is intended to preserve the sanctity of Uganda Shilling.
Ggoobi issued the warning through the Budget Execution Circular for FY2023/2024 that was intended to communicate the annual cash flow plan and highlight the policy, operation and administrative guidelines for the execution of the 2023/2024 national budget.
The Secretary to Treasury lamented that he had received numerous requests from a number of accounting officers requesting to sign contracts in foreign currencies especially United States Dollars and Euros, a move he says is contrary to the fiscal and monetary policies agreed with Bank of Uganda, seeking to limit such contracts for the sanity of the Uganda shilling.
He wrote, “Contracting in the local currency is meant to preserve the sanctity and value of the shilling since the budget is appropriated in the local currency which is easily convertible. All contracts for works, goods and services shall be awarded in Uganda shillings to hedge cost overruns due to global forex rates fluctuations that impact on the stability of the shilling. All contracts included those that follow international competitive bidding procedures shall be quoted in Uganda shillings.”
Ggoobi however provided that the only exception for signing contracts in foreign currency is if it is clearly expressed in the financing agreements with development partners to use other currencies in the bidding process, if necessary.
“This should be strictly the exception and not the norm. I request the Honourable Attorney General’s chambers to take note and enforce the guidelines while approving agreements,” added Ggoobi.
