{UAH} Oh Boy! Don’t blame me for fighter jets cash, says Mutebile - National - monitor.co.ug
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Don't blame me for fighter jets cash, says Mutebile - National
Mr Mutebile during the interview at his home in Kampala on Sunday. Photo by Abubaker Lubowa
In Summary
Bank of Uganda Governor Emmanuel Tumusiime-Mutebile sat down with Daily Monitor's Isaac Imaka and Stephen Otage to explain a wide range of issues, including the expenditure on the purchase of the fighter jets and the payment of huge amounts of money to the controversial Haba Group of Companies. This was two days after commenting on how treasury bills cash found its way into financing the 2011 general elections, while addressing a conference last week.
Q: You say Daily Monitor did not really capture what you were communicating when you made statements in relation to election funding. Can you put the statement in perspective?
A: Bank of Uganda (BoU) has no control over what government spends in and how much. In this particular case what was at stake was that government was requesting money and we issued treasury bills and treasury bonds which Bank of Uganda sold directly to the public and the money was given to the government. This means that the government determines the actual elements of spending. Government is fundamentally responsible for what it spends on because even if they wanted money and resorted to BoU for money, they do not tell us what they are spending it on.
BoU provides Treasury Bills and treasury bonds, which the bank sells on behalf of government to finance government deficit. It has nothing to do with deciding on the level and composition of that deficit.
Q:When did you issue the treasury Bills and Bonds?
A: BoU issues Treasury Bills and Bonds any time of the financial year when government asks for them.
Q: At what point did you realise that the Treasury Bills you were issuing in the year or months leading to the 2011 elections went towards financing elections? Is it suspicion or something you actually confirmed?
I cannot confirm until I look at the details of the Treasury Bills and its composition but what I am saying is that in principle, it does not matter. All I am saying is that BoU did not finance government expenditure by printing money. The bank replied to the request for money by issuing Treasury Bills and selling them for the mandatory purpose of closing the government deficit
Q:At the conference you said you would not give Treasury Bills again towards elections because you think the last time you did, money was used to finance elections. Do you still stand by that decision?
A: I will give them the Treasury Bills. What I am saying is that I would not know whether the Treasury Bills are going to finance roads, elections or something else. All that is determined by the government and it is even known in the budget how much of government spending will be financed using Treasury Bills.
Q: As a seasoned economist, can there be a solution to uncertainty of spending money resulting from Treasury Bills?
A:Yes and no. If the Ministry of Finance was committed to stopping to spend government money which has no source of financing in cash and where government has not been able to raise any revenue to finance these expenditures and if the Ministry of Finance was strong enough to say no to expenditures which are not funded by the Budget, then I would have no problem.
Q:Do you think the Ministry of Finance is strong enough to do that?
A: That question should go to them.
Q: You also said you have never yielded to President Museveni's orders for as long as they are inconsistent with your duties. Is that true?
A: What I said is that I do not remember accepting an order from the President; orders that were inconsistent with my duties. Yes, that I said.
Q: There are was $142 million given to Haba Group and the purchase of jets at $740 million all on the orders of the President. Were these scenarios consistent with your duties? In what way were they inconsistent? When you appeared before Parliament, you said the President promised to pay back the money spent on jets and that that money was spent without Parliament approval. In addition, Parliament held that it was wrong for you to give Haba Group money that never belonged to the company. Are you saying you were right in all these cases?
A: On the expenditure on army jets, BoU was instructed to provide support to this expenditure of government because government did not know it had a deficit but I knew that it was unplanned unbudgeted expenditure. I was helping the Ministry of Finance to get this unplanned expenditure while pending approval by Parliament. It would be a problem for me if Parliament failed to approve the expenditure but Parliament did not fail to.
The Haba Group expenditure is more subtle. The President was not involved in it. In fact, he was not involved in nearly all of them. That was not expenditure by the army or the President's office where he would be involved directly.
These expenditures were a total sum of various requisitions by Ministry of Finance and they requested me to help pay these expenditures which would be reimbursed when they go to Parliament. You can accuse me of having taken Ministry of Finance's word at face value but it is not inconsistent with my duties.
When we started lending Haba Group, it was not more than Shs100m. The $142 billion was a result of 10 different requests which continued growing because of reluctance by the ministry to press its foot against wherever orders were coming from.
A:You are saying the Ministry of Finance promised to reimburse the money and you also gave money for the jets because the President had promised to pay back. So you spent huge sums of money because of mere promises, is that typical of you?
A: It is not typical because that is not typical of BoU decisions. It is typical of decisions outside BoU because I do not allow spending outside the budget.
Q: You said you would not accept any instructions from the President, instructions which are inconsistent with your job. Can you share with us some presidential advances you have rejected?
A: Why do you want to cause trouble for me? Isn't it enough to say that I do not remember any instructions which were inconsistent with my duties?
Q: These two scenarios have caused some people to conclude that BoU has lost its autonomy. Why should they have confidence in your ability to manage the bank?
A: The Constitution guarantees the independence of BoU in executing its functions and the BoU Act clearly states that the bank shall not be subject to control by any person or authority... Even when I am issuing these treasury bills and treasury bonds, I do it because I think it is right for government to spend on these things otherwise I would demand to know why they did not budget for them but in these cases, the urgency seemed so great that I could not see how anybody in their true minds could refuse this because ministry of Finance guaranteed it. If I thought it was not good, I would not have accepted.
Q:But this turned out controversial and affected the economy. Why should people have confidence in your ability to manage the bank?
A: Do you know how many decisions I make every day or a month? These are only two. These are two out of about 10,000 decisions which I make and you think this is the basis to condemn me? They are not enough to condemn me.
Q: Are you saying the two mistakes are negligible?
A: We should not neglect them but they are not enough to condemn me.
Q:Do you believe the bank's credibility outside there is strong?
A: Outside the Uganda press, yes it is very strong.
Q: Where would you like to see the Shilling go as Governor?
A: I cannot discuss that matter because people will begin thinking I am not a serious Governor. The Shilling will be there tomorrow.
Q: As Governor, what risks do you see in the banking sector?
A: Right now, I do not see any risks. The BoU Supervision Department is one of the most active divisions of the bank because they are permanently showing banks what to do in order to remain stable only that lending from banks to private sector is rising very fast, which, again, causes me to worry about banking supervision. It is a problem but not a big problem. It is all about guarding against future risky behaviour.
Q: Now to the National Bank of Commerce. Word is that you had turned a blind eye to the bank even amidst its failures because you were close to the proprietors. That they had to send Dr Louis Kasekende to close it when you were out of the country, is it true?
A: I tasked my deputy to close down the bank because I could not handle a matter where I was looked at as having interest. As those who may know the story are aware, I handed over all my interests in that bank the moment I was appointed Governor BoU. Because I was somehow associated with the bank and I did not want this thought to be there. I asked my deputy to take over right from the beginning I was not pushed by anybody. I was in office when the bank was being closed.
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