Monday, September 7, 2009

Public Expenditure Tracking in Water

1.0 Introduction

1.1 Public Expenditure Tracking System (PETS) project
Civil Society Organizations (CSOs) in Uganda are in a process of providing a consolidated and coherent framework for monitoring resource utilization in local governments. It is built on and recognizes other monitoring initiatives by Local Governments (LGs) and other government led monitoring initiatives. Its central theme is proactive budget and expenditure monitoring which is a departure from the existing ex-post expenditure tracking systems that have hitherto been employed in Uganda. It emphasizes demand driven monitoring of government expenditures at various levels.

PETS is a survey that lays out processes and instruments for proactive budget monitoring and evaluation of resource utilization by local government institutions. It intends to strengthen an in-built system of monitoring and evaluation of all processes of the planning, budgeting and implementation. The findings of such survey should inform planning, budget (resource allocation) and ensure focused development within the framework of the Poverty Eradication Action Plan (PEAP) and Poverty Reduction Strategy Plan (PRSP).

Governance issues and poverty issues are closely linked, but the budget has more direct implications for poverty strategies. Poverty is a multidimensional problem in Uganda and it is likely that improvements to the budgetary system will contribute to poverty alleviation to a greater extent. More resources distributed through a poor budget system might not result in desirable outcome. A poor budget system cannot generate useful information. Presented in a more transparent and accountable manner the budget can establish whether funds were used in accordance with policies. Taking all this into consideration, an increased focus on budget advocacy and involvement of various stakeholders including CSOs/ Civil Society is relevant for the smooth allocation of resources, decision making, etc is essential for smooth implementation of the and PEAP/PRSP.

1.2 The Objectives of the project:

1.4.1 Overall objective:

The overall aim is to establish an informed and effective budget performance monitoring system that puts into consideration the perceptive of the intended beneficiaries. The subsequent benefit is to enhance community ownership of Government programs. This helps in making policies and budgeting processes that promote efficient delivery of services

2.0 Goal of the PET Survey

2.1 The goal of Public Expenditure Tracking Survey (PETS) on PAF priority areas is to determine whether funds remitted from Ministry of Finance, Panning and Economic Development(MoFPED) reach the intended areas.

3.0 Methodology of a good PET:

3.1 The following documents should be retrieved and reviewed:
• MoFPED Monthly releases
• Bank statements from the grant collection account
• Cash book for grant collection account and other departments
• Release notices and receipts

3.2 The following places should be visited and various departments :
• MoFPED head offices in Kampala
• Ministry of Water Lands and Environment
• Directorate of Water Development in Kampala
• District headquarters
• District Water Offices
• Water Points
4.0 Outputs
• A Public Expenditure Tracking Survey (PETS) on releases from MOFEP to Districts for PAF priority directly or through DWD.
• A Public Expenditure Tracking Survey (PETS) on PAF priority areas report produced.

5.0 Survey priority areas

5.1.1 The survey should be conducted with the following information in mind:

5.2.2 PAF priority areas are the following;

Water and Sanitation -Rural Water component --Development

5.3 Government of Uganda budgeting system

5.3.1 Macro-economic Framework

The Government of Uganda target rate of real economic growth is 7 percent per annum. In support of the growth it is envisaged to maintain a maximum 5% annual consumer price inflation, increased private sector credit and investment, maintenance of foreign exchange reserves equivalent to a minimum level of five months of imports and maintenance of a competitive real exchange rate.

5.3.2 Budget releases for specific Financial Year

In PAF areas like Water; there are three types of expenditure categories:

i. Wage;
ii. Non-Wage recurrent and
iii. Domestic Development.

Development releases are mainly for domestic development project while the other recurrent non wage releases are for running programs at departmental levels.

5.3.3 Releases of PAF

All releases from MoFEP to PAF areas are categorized as detailed below into a District account (Grant Collection Account) and then it is remitted to departments with the following codes:

01 Administration
02 Finance Planning & Internal Audit
03 Statutory Bodies
04 Production
05 Health
06 Education
07 Works
08 Natural Resources
09 Community Based Services

Water is considered as a natural resource with code 08


When the PAF funds are sent to the District account (Grant Collection Account) they are coded with an expenditure code 3214** and then it is remitted to departments with the same code. However when it is received at the Grant Collection Account, the code changes to a revenue code 1333** and then it is remitted from departments to beneficiaries. Some PAF areas like NAADS, PMA and a non PAF area like LGDP are then sent to sub counties which spend and account for the funds at that level. W & S under code 06 is a conditional grants.

Project/0156 06/RURL 321428 133328 Rural Water & Sanitation

5.4 District Codes

5.4.1 As stated above, funds are remitted to respective projects and in case of Municipalities, funds of NAADS, are received from the District not MoFEP since it is treated as a Sub County.


1. Most releases are at the end of the months and therefore they appear at the District level as if they were one month late. However implementation of Electronic transfers will reduce such delays

2. All transfers are supposed to be published at spending levels. However a glance at the departmental notice boards revealed that this is not religiously done. CSOs should as a matter of emphasis encourage mandatory public display of public funds especially during sub county tours.
3. At the end of each quarter, Accounting offices are supposed to submit progress reports and accountability statements to relevant sector ministries and such documents are supposed to be copied to MoFEP. This facilitates timely releases of other quarters. However there are delays and that is why in general quarterly releases at beginning delay.
4. Release of funds at the MoFEP level does not depend on the type of project. Funds are released as a quarter of the whole annual revised estimates or just one twelfth of annual estimates. Therefore projects like roads have to wait so that they are constructed towards the end of the financial year when most of the funds have been released. Given the procurement process then it becomes hard to complete such projects in a given FY and if there are unspent funds, such should be sent back to MoFEP.
5. It was also observed that at least in June MoFEP no longer remits PAF funds to Districts for projects as was in the past. This has helped a lot in allowing time for procurement processes before the mandatory expiry of District accounts where funds are sent back to MoFEP.
6. As a general rule funds are no longer being relocated at the District level. They are sent and in time from the Grant Collection Account to respective Departments and spending levels. And indeed there are improved financial disbursements in accordance with relevant laws, regulations and guidelines for this sector. The question is now whether there is value for money at implementation level.


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