JETS SCANDAL

Jets: Government can get money secretly


Posted Monitor Thursday, June 16 2011 at 00:00

The State House spokesman yesterday said the government does not need parliamentary approval to withdraw funds from Bank of Uganda (BoU), for security reasons.

Mr Tamale Mirundi, President Museveni’s press secretary, told Daily Monitor that the security of a country supersedes other national issues and there was no need for the President to seek approval from the Parliament to authorise the withdraw of the funds from the central bank to buy fighter jets.

“Political hygiene requires that you follow procedure. Buying defence equipment doesn’t follow procedure. What if you delay in debating the issue and the enemy infiltrates Parliament? You could be attacked,” Mr Mirundi said in an interview.

He was responding to questions about Mr Mutebile’s views on the way President Museveni is running the economy, as reported on Tuesday by the Financial Times (FT) a United Kingdom-based newspaper.

Reuters News Agency yesterday reported that the Ugandan shilling, rattled by criticisms of the President by the central bank chief and undermined by heavy dollar demand from the oil sector plunged record lows against the dollar falling through the previous low of 2,424/2,429 hit on March 15.

The central bank said it would sell hard currency in the local foreign exchange market, market players said but could not confirm how much.

The shilling has fallen by 3.8 per cent against the greenback this year, Reuters reported, mirroring a depreciating trend in local currencies across East Africa.

Mr Mutebile, who has been central bank governor since 2001, told the FT that he had disagreed with Mr Museveni over the decision to withdraw $400 (Shs960 billion) for the jets, which depleted the national reserves from six to four months of import cover.
The governor is quoted to have said he was still “fighting” that kind of indiscipline.

But Mr Mirundi yesterday said there was no way the governor can fight the President over national matters. “No one can fight President Museveni. If you disagree with the President you can write to him…and if the disagreement is fundamental then you resign,” he said in an interview.

Mr Keith Muhakanizi, the deputy secretary to the treasury, said: “The Constitution says Bank of Uganda is independent,” reaffirming a generally known position that seems to be under threat.

Minister speaks
According to the Minister of Finance, Ms Maria Kiwanuka, Uganda’s Foreign Exchange Reserves are projected at $2.2 billion by end June 2011, equivalent to four months of import cover, compared to about $2.5 billion in June 2010.

Foreign exchange reserves are used by nations for contingency purposes, stabilising the foreign exchange rate and buying imports for country in case of a crisis. The reduction in reserves means that the government’s capacity to carry out the above functions has been weakened. Withdrawal of the funds requires parliamentary approval.

Earlier this year, the Public Accounts Committee wrote to the central bank governor seeking an explanation over the release of the jet funds without prior parliamentary approval.

But on March 24, President Museveni met MPs from the ruling National Resistance Movement party and asked them to rubberstamp the purchase of the jets under a classified vote. The President told the MPs that the jets were necessary for Uganda’s defence now that the country has confirmed oil reserves.

The FT article also revealed that Mr Mutebile had found it “very, very humiliating” after Uganda failed an International Monetary Fund review earlier this year following the record Shs650b supplementary budgets requested for by the government.

Most of the money is said have gone to election-related expenses. Analysts have partly attributed Uganda’s current economic difficulties to government’s financial indiscipline.