The Petroleum Fund is under a new Fiscal Regime

The Government is in the process of placing a ceiling on withdrawals from the Petroleum Fund which are used to support the budget. The fiscal ceiling will limit the government to withdrawing a maximum of 0.8% of the petroleum revenues for budget support.

Ugandan Minister Of Finance Mathia Kasaija

Since the establishment of the Petroleum Fund by the Public Finance Management Act (PFMA), 2015, the government has been withdrawing money from it to finance the budget.

The Fund is overseen by the Bank of Uganda operating on three accounts including a dollar and shillings accounts managed at Bank of Uganda and a third account in New York to facilitate investment of revenue.

The Fund is used to finance the Budget and is also used for savings or investments. It also serves as a depository for all revenues accruing to the government from petroleum and related activities.

According to the finance ministry, the disbursements from the Fund are through appropriation to either the Consolidated Fund or to the Petroleum Revenue Investment Reserve Account

According to the finance ministry, this ceiling will help grow the Fund towards clear investment options. At the moment, there is no ceiling on the withdrawals from the Petroleum Fund.

Mr. Moses Kaggwa, the acting director of economic affairs at the finance ministry, says the new ceiling will ensure the Fund is actually used for budgetary support, investment and saving.

“The proposed fiscal rule is intended to manage petroleum revenues,” Mr. Kaggwa said.

“A maximum of oil revenue with 0.8% of the preceding year’s estimated non-oil Gross Domestic Product outturn shall be transferred to the consolidated fund for the budget operations,” he added.

The rest of the monies, Mr. Kaggwa says, will go to the Petroleum Revenue Investment Reserve for investment.

“The Government is aware that the oil and gas revenues are not infinite, so we need to safeguard the little revenues we have generated. Introducing a fiscal rule enables the country to institute a ceiling on how much can be withdrawn,” Mr. Kaggwa says.

According to the annual audited statements for the financial year 2019/2020, the latest statements, the Petroleum Fund received revenue amounts to sh35.5b.

Source: The New Vision

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