There was an increase in the stock of outstanding quantifiable legal proceedings by 10 % to Shs10.407Trn as at end June 2020 from Shs9.461Trn as at end June 2019, the Ministry of Finance, Planning and Economic Development has revealed.
According to the Ministry of Finance, these exposures from legal claims were accumulated from Ministries, Agencies, Referral Hospitals and Embassies & Missions.
The details are contained in the contingent liabilities annual field report for 2019/2020 that was released in March 2021 and only uploaded recently.
Government added that all contingent liabilities from legal proceedings are inform of domestic contingent liabilities.
For District Local Governments, as at end June 2020, the stock of outstanding quantifiable legal proceedings was Shs 7.15 billion and this gross exposure from legal claims increased by 379.9% from Shs1.49 billion as at end June 2019.
Maris Wanyera Acting Director, Directorate of Debt and Cash Policy at Ministry of Finance wrote in the report that legal proceedings against the Government are a major source of contingent liabilities and they are difficult to control.
Contingent liabilities from litigious activities derive from settlements ruled against the government and in favor of third parties and key drivers of these court claims include land compensation cases, contractual disputes, human right cases, and claims of negligence on the part of public officials.
He said that Government does not have the control to approve a contingent liability from legal proceedings, like is the case for guarantees and unguaranteed debt liabilities from public entities.
“When an individual or entity decides to sue the Government, the contingent liability is born. Therefore, no approval process is in place and the Government can only monitor, assess risks, take risk-mitigation measures and report on contingent liabilities from legal proceedings. Where contingent liabilities have arisen as a consequence of legal action being taken against the Government of Uganda, the amount shown is the amount claimed and this the maximum potential cost,” said Wanyera.
Articles 42(2) of The Public Finance Management Act (PFMA 2015), as amended requires the Minister of Finance, by 1st April, to prepare and submit to Parliament a detailed report of the preceding financial year, on the management of the public debt, guarantees and the other financial liabilities of Government.
This requirement is intended to streamline the government’s internal mechanism for mitigation of fiscal risk, monitoring and reporting on its operations.
