Special Funds transferred to BoB

SHARE   |   Thursday, 12 July 2018   |   By Keitebe Kgosikebatho
Matambo Matambo

Members of Parliament have welcomed the decision by government to transfer all funds held under special funds into the government remittance account to be managed as part of the government cash balances held at the bank of Botswana, with immediate effect.

This and four other specific measures according to the Minister of Finance and Economic Development, Kenneth Matambo were recently approved by cabinet to strengthen financial management of special funds.

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When briefing Parliament about this move on Friday, Matambo said as the overall custodian of the country’s public finances, his ministry is concerned about some aspects of the management of some of the special funds.

He pointed out that among  the key concerns are non-compliance  to the public finance  management Act in the administration of the Funds, with breaches including ; the use  of funds for unintended purposes, unexplained  delays in submission  or non-submission of audited accounts, investment  of surplus  funds without the input of  the Office of the Accountant  General as required  by the Public Finance Management Act  and that further, certain sections in some fund orders are not very clear leading to various  interpretations. This he says has resulted in some designated fund Administrators using their discretion in utilizing monies held under such funds.

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“The case of the National Petroleum Fund has emphasised the need for urgent review of government special funds and improvement in their management. I am constrained to say much as the matter is “sub judice” before the courts of law and the legal process has to be respected,” said Matambo.

In addition to the transfer of fund to the government remittance account, Matambo also stated that cabinet has also approved that there should be an increased capacity within the Office of the Accountant General to Monitor the management of special funds by those designated as administrators, who are the Accounting Officers for the respective ministries under which the fund is established.

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“A unit has been established   under the Office of the Accountant General. This unit will ensure that there is compliance with the Public Finance Management Act. It will also embark on the review of existing fund orders, in consultation with relevant administrators, with a view to aligning the old fund   orders established under the previous Finance and Audit Act, with the new Public Finance Management Act,” said Matambo.

According to Matambo government  has also with immediate effect ceased to pay interest  on Special Funds moneys managed as part of the Government cash balances, save for those managed on behalf of third parties, such as the Guardian Fund.

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“Money in some of these funds belongs to the Government, and therefore, it is not prudent for government to pay itself interest,” he explained.

Another specific measure taken, Matambo says is  that his ministry, in consultation  with administrators  of the various   funds, will be undertaking  a wholesome  review of special fund Orders in line with provisions of the Public Finance  Management Act, as well as to ensure consistency  with domestic  Anti-Money Laundering and Counter Financing of Terrorism laws and standards.

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“This will not only ensure compliance but the security of these resources as well. The review may lead to dissolution of some of the Funds, where considered appropriate,” he said.

And lastly he said  in accordance with Section 6 (2a) of the Public Finance Management Act, where there is non-compliance with the statute establishing a fund, or where there is proof of gross   mismanagement, his ministry will henceforth exercise its powers and re-designate another public officer to take over the administration  of the  fund.

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“In addition appropriate charges will be imposed on such officer in accordance with the provisions of the Public Service Act,” he said.

Meanwhile although they welcomed and commended government on making the right move in order to protect public funds, most legislators made recommendations, and expressed disappointment on how government has in the past handled issues concerning public funds.

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Bonnington South MP Ndaba Gaolatlhe appealed to government to consider enhancing the capacity of the legislature through the establishment of a parliamentary budget office, which he says in developed democracies plays an integral role in the management of special funds.  Matambo appreciated Gaolatlhe ’suggestion but said although such a mechanism was long overdue, due to budgetary constraints it was not yet possible to execute.

Selebi Phikwe  East MP  Dithapelo Keorapetse  asked the  Minister to among others  brief the house about the number of special funds which have been subjected to maladministration , mismanagement, fiscal and revenue crime as well as  corruption to which Matambo responded that it should be revealed by the wholesome review that his ministry will be embarking on.

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For his part Gaborone North MP Haskins Nkaigwa expressed concern on failure by Matambo to assure the house that he will ensure that those involved in gross mismanagement of some of the special funds will be brought to book.

There are 34 Special Funds of various types. 30 transact through and are monitored by the Ministry of Finance and Economic Development through the Office of the Accountant General, while four were managed by various Fund Managers, with their deposits held with commercial banks and or Fund Managers.

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14 out of the 30 Special Funds monitored by the Office of the Accountant General earn a 3.5 % interest on their balances held as part of the government cash balances with Bank of Botswana. This interest rate is linked to the prevailing bank rate. Of the 14, six of them belong to third parties such as the Guardian Fund, Sim’s Bursary Trust, Rewards and Fines Funds for Botswana Defence Force, Botswana Police Services, Botswana Prisons Services and the Botswana Police Relief Fund.    



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