A move to stop government officials such as the finance minister from ordering Bank of Uganda to print more money has caused more problems, Ezra Suruma, the former finance minister has revealed.
Suruma, Uganda’s Finance Minister from 2005 to 2009 says that the attempt to shield the Central Bank has led to changes, which has made the institution too powerful to account to anyone.
He explains that addressing the financial breakdown that occurred during the 1970s and 80s, government adopted the German model of monetary policy in the 1990’s, which confines the powers of the Finance minister over the Central Bank.
He says the decision arose out of the fact that the past Finance Ministers repeatedly ordered the Central Bank to print more money, a move that often caused the shillings to depreciate. He however says that, the attempt to reform the Central Bank and rebuild the country’s financial system by making it more independent has resulted in errors.
Suruma who also worked as a Deputy Governor of the Central Bank says that he believes that the reform went “too far” after it made the Central Bank “too powerful” and unaccountable to anyone.
He says that while Minister of Finance, he realized that the Bank was not providing satisfactory accountability. Suruma, now working as a senior presidential Advisor on Finance and Planning, says there is need to review the independence of the Central Bank including the status of other institutions in the country to make them more accountable and transparent.
Dr Jan Tibamwenda, the Director of Communication at Bank of Uganda however told our reporter that while the Bank has operational independence guaranteed by Article 161 of the 1995 constitution, it was also aware that independence requires transparency and accountability, which in turn achieves credibility.
He explains that the accounts of the bank are audited, at least once every financial year by the Auditor General, who presents reports to Parliament adding that, the bank also has various channels of communicating its actions to the public and other relevant institutions.
He explains that the bank submits an annual report to parliament every September 30th and that the management of the bank appears before parliament whenever required. In addition, he says the bank also publishes its assets and liabilities every four months in the gazette and submits a copy to the Minister of Finance.
A board of directors appointed by the Minister of Finance manages the Bank of Uganda. However, the president appoints the Governor and deputy governor who chair the board. The Bank of Uganda has functions ranging from formulating and implementing monetary policy to issuing currency notes and coins, maintaining an external assets reserve, acting as a financial advisor and banker of the government as well as supervising controlling all financial institutions in the country.