Finance makes U-turn on sh150b NMS loan

Members of Parliament investigating the controversial sh150b loan meant for National Medical Stores were left in shock on Wednesday when officials from the Ministry of Finance made a U-turn saying the loan was not meant for NMS but for general budget support.

Finance officials led by the Permanent Secretary, Keith Muhakanizi, wondered why NMS was demanding for the loan yet the money was released to them during the 2016/17 financial year.

Muhakanizi told the committee on Public Accounts Committee chaired by MP Gerald Karuhanga committee that NMS received the money as part of their sector budget for the financial year 2016/17.

"We have released all the money to NMS as appropriated by Parliament plus a supplementary budget. The loan came in as budget support and not as project support specifically meant for NMS. So during the budget process of 2016/17, Parliament appropriated the money and we released all of its 100% to them," he said as members booed him and others calling him a liar.

Accountant General Lawrence Ssemakula explained that the Ministry has so far released all the sh264.9b that was appropriated to NMS by Parliament.

"NMS and other agencies were given as a condition because the Bank wanted samples of institutions affected by the exchange rate in order to give us the loan….." but before he could complete the statement, Karuhanga ordered him to stop; saying he was lying to the committee.

"Stop confusing us. You are lying to the committee. Why then did the ministry use NMS and other agencies to acquire the loan and never remitted it to them? According to the agreements and all the documents, this loan was specifically meant for the agencies?" Public Accounts Committee chairman Gerald Karuhanga (Ntungamo Municipality) fumed.

Although he threatened to detain Muhakanizi, the PS stuck to his guns and insisted that there was no money for NMS.

The Committee then asked NMS officials led by the Ministry of Health Permanent Secretary Dr. Diana Atwine whether they had received the money.

Atwine informed the committee on that as a result of the shortage of finances, NMS will not be able to supply the health centres the required medicines in the financial year 2017/18.

"There has been a number of communications between Finance and NMS. They promised to provide us the money when the loan facility has been approved. To date, we have not received that money. We are still waiting," she said.

"When we communicated to Finance our funding constraints, the PS advised us that the funding facility was before Parliament for approval. He said it would be used to address our funding gaps. Unfortunately even when the loan was approved, we never got to know about it. We were only informed about it during the budget committee meeting when a member raised the matter," she added.

Parliament in 2016 approved a loan request amounting to $200m from the Eastern and Southern African Trade and Development Bank (PTA Bank) specifically for Health ($42.1m), Electricity ($2.8m) and Transport ($2.8m) sectors.

The loan had originally been brought to Parliament as exchange rate stabilization loan but was rejected. Finance later brought it back in form of loan request for procurement of medicines for NMS, electricity expansion, Transport and exchange rate stabilization.

Although documents indicate that PTA Bank released the loan basing on documents submitted by the agencies, it was never remitted to them accordance with the agreed terms of the funding.

Last week while requesting for a supplementary budget for NMS, Finance State Minister David Bahati was put to task to explain why NMS  lacks funds to procure medicines yet the funders released the money in November last year.

MP Cecilia Ogwal (Dokolo) wondered why NMS was going through a financial crisis when Parliament approved a loan request of $200m.

During the meeting yesterday, members put Bank of Uganda officials led by the Governor Tumusiime Mutebile to task to explain whether the loan was released from the funders to the respective recipients.

Mutebile told the committee that between October20th 2016 and May 23^, 2017; BOU received $97.9m from PTA bank and transferred all the money to the Ministry of Finance Consolidated Account as instructed by the Ministry of Finance.

"How it was used, is the ministry of finance to explain," he said.

The MPs after failing to get answers from Muhakanizi agreed to summon the Minister of Finance to explain the whereabouts of the money.