Speech by Ambassador Kristian SCHMIDT, The Head of Delegation of the European Union to the Republic of Uganda at the launch of the Uganda Public Financial Management Reform Strategy 2014-18 28 August 2014 Right Honourable Prime Minister Amama Mbabazi Honourable Minister of Finance Maria Kiwanuka Representatives of the Government of Uganda Members of Parliament Excellencies Ambassadors and Development Partner Colleagues Distinguished Participants, Sound financial management is the backbone of any public administration. How we manage public funds is one of the most important bonds between a government and its governed. It is therefore a great honour to speak to you today on behalf of the Development Partners at the occasion of the launch of the Uganda PFM Reform Strategy 2014 - 2018. In doing so, I will focus on three main messages: First, I would like to congratulate the Government of Uganda and particularly the Minister of Finance. I will share this honour with the representative of the German Embassy who will look specifically at the past challenges and achievements in Uganda’s PFM reforms leading to the formulation of this new strategy document. This is a good document. Well written, clearly structured and of a technical quality that I think many European countries would be proud. As such, it is a very good basis for the coordination of project activities and collaboration with us, your development partners. Most importantly maybe, the re-defined Public Expenditure Management Committee (PEMCOM) gives a high-level forum for strategic guidance and control within the administration. We see the door is open to us, for enhanced dialogue on future PFM reforms, and we enter willingly. Honourable Ministers, You are very well aware that we development partners have over the last years looked critically at several prominent cases of fraud, embezzlement and mismanagement of public funds. These events have been catalysts to either start or accelerate important PFM reforms, included in this new strategy. Let me highlight introduction of the Single Treasury Account and the integration of IT systems. Needless to say, it would have been better for these reforms to be launched without the corruption scandals as their trigger. We must now ensure that these reforms will give systemic guarantees that such scandals can never reoccur. Honourable ministers, We congratulate you, and as my second point, we pledge our support to your PFM reform endeavours. Several development partners have on-going engagements and some already confirmed their continuous commitment. We hope that we can also convince other partners to either renew their engagement or to join as newcomers, within the context of the joint Financial Management and Accountability Programme (FINMAP) or outside. FINMAP will now go in its third phase and is largely considered a success. For the European Union, I can confirm that we will continue our support to the area of good governance which also covers public finance management. A recently conducted identification exercise for future EU engagement in the sector gave a positive assessment of FINMAP. We will be discussing this further within the development partners’ PFM working group, and I take this opportunity to thank our German colleagues for their successful chairing of that group over the last three years. The EU Delegation is honoured to take over the chair, as the new PFM Reform Strategy is launched. It gives us an excellent basis for future coordination and monitoring of donor support to the sector. This brings me to my third and final point. Indeed, as we look to the future, and with the permission of the honourable ministers, there are eight recommendations for the successful implementation of the new reform strategy that I would like to highlight: (1) Lets keep the momentum Government and development partners need to continue the reform drive started under the previous phases of the FINMAP programme and then accentuated also in the high-level action matrix for PFM reforms. I would say the glass is more than half full. But we are not there yet, and progress is not irreversible. In particular, there needs to be a greater focus on compliance with PFM procedures, including adequate sanctions for those violating the rules and regulations. Administrative indifference is not acceptable. (2) Give reforms a due date Reforms lose their credibility and legitimacy if they drag on for too long. The aim should be to have a reformed, functioning and efficient PFM system by the end of this reform strategy 2014-18. Along the way, FINMAP-III needs to be an implementation programme with a robust results framework and clearly set targets. (3) Provide the necessary legal basis The PFM strategy makes multiple references to the PFM Bill. One might even wonder whether it can be implemented without this Bill. We urge Parliament to adopt the PFM Bill without further delays, as it is a key pillar of PFM reforms strengthening the budget process and governance and providing the urgently needed sound oil revenue management framework. The Amendments Bills to the Leadership Code and Anti-Corruption Act have also been in gestation for some time. Their adoption would make asset declarations mandatory, enable government to recover misappropriated funds more effectively and put an end to the impunity of those responsible. (4) Let us strengthen policy dialogue and coordination As I said earlier, our sector dialogue has come a long way with the upgrading of the PEMCOM to a policy dialogue forum with strong ties to implementation activities. With the PFM strategy in place, we invite Government to ensure that it becomes an integral part of NDP-II. Policy dialogue along the whole budgetary cycle, including audit and oversight functions, should be reflected in NDP formulation and definition of sector linkages. (5) We see a burning need to continue the fight against corruption Strong PFM systems reduce the opportunities for fraud and corruption, and for the public, they are the visible indicators of whether the reforms work. As the saying goes, A good reputation enters on the back of a turtle, but leave on the back of a rabbit. Years of patient efforts can be lost overnight. Moreover, Ugandan citizens and taxpayers will have little incentive to comply on their behalf if they see mishandling and misappropriation on the side of those managing public money. The political will to fight corruption is critical, and needs to shine through these reforms. Without an administrative culture of zero tolerance for misuse of office and corruption, no strategy with do the trick. (6) Be accountable We, the development partners, are of course key stakeholders. But the constitutionally mandated bodies in Uganda should take the lead in the accountability chain and the fight against corruption. They represent the people of Uganda. Some of these have accumulated an impressive track record in the exercise of their mandate, such as the Office of the Auditor-General, and others are asserting their independence while building up institutional capacity, such as the Inspectorate of Government. At the top of the accountability chain sits Parliament. We appeal to Parliament to scrutinise audit reports in a timely and competent manner and to give clear guidance to the Executive. (7) Localize reforms I am glad to note that the Honourable Minister for Local Government [to be confirmed at event] and several District Chairpersons are joining the event today. As the PFM reform strategy states, it will underpin the ongoing decentralization efforts by improving local public financial management but also by contributing towards improved resource allocation. We appeal to Local Government to take up this challenge. You need to take seize the opportunity offered, but you will also have to accept greater responsibility than maybe in the past. I do believe that the overall success of the PFM reform strategy will heavily depend on whether it will be able to include decentralized government. (8) Seek closer engagement with civil society and private sector The legitimacy and public acceptance of PFM reforms will only be strengthened by closer engagement with civil society and private sector. We call on Government to be courageous in seeking dialogue and utilizing the budgetary monitoring capacity of civil society, particularly when it comes to spending efficiency and transparency at local level. We acknowledge and welcome recent efforts and initiatives towards this goal. Civil society need to be encouraged to play their part in a fair and transparent manner. Development partners are ready to support this process. I am confident that these points give us food for thought, but at the same time encourage us to continue the PFM reform course in Uganda. Once again, I congratulate the Government of Uganda on establishing its PFM reform agenda for the coming four years, based on your achievements and lessons learned from the past, and I look forward to our good cooperation also in the future. Thank You!
Posted on: Thu, 28 Aug 2014 13:43:54 +0000
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