Improving Public Debt Management
In the OIC Member Countries
93
B) Public Debt ManagementGovernance and Strategy Development
Legal frameworkAccording to the Public Finance Management Act 2015, the Minister of Finance is the sole
responsible authority for raising money by loans and issuing guarantees for and on behalf of
the government in order to finance the budget deficit, for the management of monetary policy,
to obtain foreign currency, for onlending to approved institutions, and for defraying an
expenditure which may lawfully be defrayed (PFMA 2015, Article 36).
The accountability of the Minister of Finance is ascertained by the socalled Budget Code,
which requires the Ministry of Finance, Planning and Economic Development (MoFPED) to
present information regarding guarantees of loans and grants to the Ugandan parliament
(MoFPED 2013). As specified by the Constitution of Uganda, the parliament is responsible for
approving new loans (Constitution of Uganda 1995, Article 159). Moreover, the management
of public debt is evaluated by the Office of the Auditor General (OAG 2015).
Uganda has a legislation on contingent liabilities, especially those arising from state
guarantees, and established a unit within the Ministry of Finance to manage contingent
liabilities. Furthermore, the parliament has to authorize guarantees. This process is
implemented in the national constitution (MEFMI 2015). Managerial structure (incl.
coordination with other policies)The Minister of Finance is authorized to secure loans by issuing government bills, government
bonds or any other appropriate financing method, including but not limited to a fluctuating
overdraft (PFMA 2015, Art. 36). Furthermore, the MoFPED is responsible for directing and
organizing the public debt management system, “including policy formulation, regulation and
mobilization of resources as well as establishment of a legal framework to govern public debt
functions” (OAG 2015, p. 11).
In any event, the responsibilities for debt management duties within the MoFPED remain
relatively vague (OAG 2015). In the past, various independent divisions of the MoFPED
considered themselves responsible for different areas of the debt management process,
combined with a partly improvable communication between the different entities. A
centralization of debt management functions has been planned since 2013, but has been
delayed until recently due to missing approval of the new MoFPED structure by the Ministry of
Public Service (MoFPED 2013, OAG 2015). However, all debt management functions are now
centralized in the Directorate of Debt and Cash Management, which integrates front office
functions (i.e. debt issuance), middle office functions (i.e. research and analysis) and back
office functions (i.e. settlement, drawdown and recording) (OAG 2015, MoFPED 2013).
Other institutions such as the Bank of Uganda (BoU), the Office of the Accountant General and
line ministries support the MoFPED in the debt management process (MoFPED 2013). For
example, the BoU serves as an advisor to the government and is responsible for the
determination of “the type of domestic debt to issue, the asset mix, the calendar, the volumes
to be issued and issuing of domestic debt in a given year” (OAG 2015, p. 11). The Office of the
Accountant General keeps the records of both domestic and external public debt levels and
executes debt service payments and loan drawdown (OAG 2015).
Although the BoU supports the MoFPED in the area of debt management, it conducts monetary
policy separately from the fiscal policy of the government. Whereas the BoU uses
predominantly repos and reverse repos for monetary policy purposes, the proceeds from