Government plans to raid the Petroleum Fund and withdraw Shs445bn to finance the 2019/2020 budget won’t be achieved after it was revealed that the Fund only has only has Shs304.1bn.
This means that the Fund is set to be overdrawn.
The Petroleum Fund is where revenue from all petroleum-related activities is deposited.
According to the just released 2018/2019 Bank of Uganda annual report, as at July 01, 2018, the opening balance on the Petroleum Fund was USD 87.3 million (Shs322bn) and Shs121.8 billion, bringing the total to Shs443.8bn.
During the year, the report says, the inflows to the Fund were of USD 1.4 million and Shs54.7bn, while the outflows of Shs200bn was transferred to the Consolidated Fund to finance the 2018/19 budget and consequently, the balance as at June 30, 2019 stood at USD 74.8 million (Shs275.9bn) and UGX 28.2 billion, bringing the total to Shs304.1bn.
The Bank of Uganda is mandated by the Public Finance Management Act 2015 to be responsible for the operational management of the Petroleum Revenue Investment Reserve (PRIR), for investment in accordance with the Petroleum Revenue Investment policy issued by the Minister of Finance, Planning and Economic Development.
The Bank of Uganda also revealed that although the investment mandate is subject to appropriation of funds from the Petroleum Fund supported by a warrant of the Auditor General, since the establishment of the Petroleum Fund, no appropriation has been made to the Petroleum Revenue Investment Reserve for investment.
The development comes at the time Government is expected to raid the Petroleum Fund to finance the 2019/20 national budget to a tune of Shs445bn that was appropriated from the Petroleum Fund for transfer to the Consolidated Fund and no appropriations were made to Petroleum Revenue Investment Reserve for Investment.
In a related development, the Ministry of Finance is expected to avail Bank of Uganda with the annual cash flow plan of Government in line with section 59(2) of the PFM Act 2015, where money appropriated to the Consolidated Fund from the Petroleum Fund shall be withdrawn quarterly and may in accordance with the annual cash flow plan of Government be invested by BOU and the revenues and benefits shall be available at call.
Government is anticipating to eat big from Capital Gains Tax of about USD167 million from Tullow Oil (U) Ltd on the sale of part of its stake to Total E&P and CNOOC (U) Ltd.
However, this had not been finalised by 30 June 2019 and if finalised, this will increase the capitalisation of the Fund by Shs615.571bn, a move that will see the Fund move closer to one trillion mark.
