KAMPALA – The government is set to withdraw more money from its Petroleum Fund, the third time in three years, as the country struggles to finance its Shs40 trillion budget.
According to Bloomberg news, the Ministry of Finance, Planning and Economic Development intends to withdraw UGX445 billion this financial year, the highest amount in three years. The revelation is contained in Bank of Uganda’s annual report for this year.
The development comes as Uganda is yet to begin commercial oil production. The country created the fund in 2015 to receive revenue-deposits from oil-related activities including output, as well as pre-production transactions.
The Fund was established in March 2015 by the Public Finance Management Act (PFMA), 2015, and is overseen by the Bank of Uganda. The Fund operates on three accounts; a dollar and shillings accounts, respectively, managed at Bank of Uganda, and a third account in New York to facilitate investment of revenue.
Last financial year, government withdrew Shs200b from the Petroleum Fund to finance the Budget. While justifying the use of the money, the Accountant General, Mr Lawrence Semakula, said: “It does not make sense at all to keep money in the Fund lying idle yet we have a deficit. We have all these priorities such as financing infrastructure, so what do we do when we have a deficit? Rather than going out to borrow, we would rather use some money from the Fund,” Mr Semakula said in response to our queries. A UGX125.3 billion withdrawal was made the previous year.
Uganda has 6 billion barrels of oil resource and plans to start production in 2022. With commercial oil production at peak, Bank of Uganda estimates show that Uganda could earn up to $3b (about Shs7 trillion) in revenues from exports of up to 60,000 barrels of oil per day.