By Samuel Sanya
KAMPALA, The Ugandan government has decided to that it will only accept quotations made in the Uganda shilling in contracts it enters into for the procurement of goods and services.
The Permanent Secretary of the Ministry of Finance, Keith Muhakanizi, has instructions to this effect to all accounting officers in the government to issue contracts for the supply of goods and services in the local currency and not foreign currency.
Previously, government contracts for works, goods and services were paid either in local or foreign currency. Muhakanizi notes in the letter dated Jan 15, 2016, that paying in foreign currency has placed significant pressure on the shilling.
Since January last year, the shilling has lost 21 per cent of its value against the US dollar and
Muhakanizi said that awarding contracts in foreign currency caused further depreciation of the shilling which culminated in supplementary expenditure.
"You will note that since budgeting is done in Uganda shillings, awarding contracts in foreign currency has an implication on the budget execution, particularly when the exchange rate is unstable," he says.
"Therefore, in order to streamline budget implementation and minimize shortfalls and supplementary requests, all Government contracts will only be issued in Uganda shillings going forward. This however, will not affect all contracts which have been concluded and signed."
Source: NEW VISION