Financial Controls Yet To Take Hold
17 August, 2016KHARTOUM (Sudanow.info.sd) - Bad habits die hard. For, despite the stern order of the Finance Ministry to all the country’s government units to cash all their revenue into the public coffer, some units have failed to comply and continue to keep some of their earnings behind for their own use.
Informed economic sources say that some ‘’powerful’’ government units still keep part of their earnings behind, in clear defiance to the Ministry’s order not do so.” There are some powerful government entities that like to break the law,’’ maintain some economic experts approached by Sudanow.
Finance Ministry’s orders:
The Finance Ministry’s order had prevented government units from putting aside part of their proceeds for their own use and asked them, instead, to deliver all their revenue to the public treasury. The order had obliged the government bodies not to keep the money in cash form in their own safes. It also ordered them not to keep the money in bank accounts of their own and, instead, send it on the spot to the national coffer through an electronic collection system it adopted last year. It further obliged those bodies not invest in their assets without notifying the Ministry about what they want to do about those assets. The order has also scraped the financial paper forms and receipts and replaced them with an electronic transfer system through which the government units send their revenue direct to the public treasury.
The firm measure was prompted by the fact that the public treasury had used to lose huge sums of money because some government units fail to send much of their earnings to the national coffer. According to the Auditor General’s report, dated September 2015, federal government units had kept behind SDG 472.5 million and did not deliver it to the Finance Ministry, as they should normally do, while regional governments had failed to deliver SDG 24.5 million. Those units were acting in a stark violation of the terms of the Financial and Accounting Procedures Law of 2007 and the Financial and Accounting Procedures Order of 2011.
When declaring the measure in 2014, the Finance Minister Badr Eddin Mahmoud had deplored the fact that money kept behind by government units represents 30% of the state’s general budget.
Now the Finance Ministry entertains the ambition that all the state revenue for 2016 could enter the public treasury and be spent according to the priorities and requirements of the general budget. The Ministry is forecasting a total government revenue of SDG 88.7 billion in 2016. This includes tax earnings (59%), other revenues (34%), grants (6%) and social contributions (1%). It puts the general spending at SDG 97.2 billion.
Cash control and good employment of resources (via the completion of the One Treasury System and the electronic collection of government revenue) is one of the most important objectives of the financial and monetary policy of the 2016 budget, initiated in January 2016. Consolidation of electronic collection of government earnings and the encouragement of public units to apply this automatic collection system is also a priority of this year’s budget.
An accountant in a government unit has maintained that these harsh orders of the Finance Ministry had made it difficult for government units to keep back their earnings. She said, however, that some units still do so. Some units, like the customs corporation, have got some exceptions from the order, she said, ‘’but some others still keep back the money without permission. ‘’
An official of the Finance Ministry, who declined to be named, said ‘’the practice is still going on and to get rid of it is difficult and needs a lot of time.’’
The Central Bank’s unit for the promotion of the banking system says it had issued a directive to all the country’s banks not to open accounts for any of the government bodies. It said it was watching the banks for any violation of this order and keeps informing the Finance Ministry about its findings. It said the Finance Ministry is the only government authority to know about the units that break the law and open accounts in the commercial banks.
The National Auditor General, for his part, said his authority is still auditing the government accounts for 2015 and cannot divulge its findings until the auditing is complete.
The One Treasury and Electronic Revenue Collection:
In April 2016 the Finance Ministry initiated the One Treasury System, which is an electronic system to collect all the government bodies’ revenue in one account at the Central Bank (the Bank of Sudan). Accordingly, the Ministry had zeroed all other government accounts. This means that all government units accounts have been converted into (deposit only accounts) whereby they are not allowed to withdraw any money except through a certain electronic programme agreed upon with the Finance Ministry.
The Finance Ministry says this arrangement will categorically stamp out the siding of any money by any government unit in its own safe or bank account. By this order the Ministry has wanted to get full control on the flow of revenue and guarantee safe and quick financial transfers nationwide (18 states). It is also meant to guarantee a flexible management of the government revenue.
But this arrangement requires from the government units to operate in full transparency and transfer their revenues to the public coffer once they are collected. Every government unit is obliged to get connected to this system; otherwise it cannot spend from the resources allocated for it in the general budget, because the Finance Ministry does not permit any transactions outside this system.
The Finance Ministry had started this electronic collection system as of early July 2015 as part of the electronic government project. It was one of the foundations of the Economic Reform Programme (2015-2019) that seeks to govern the movement of the economic performance. Finance Minister Badr Eddin Mahmoud had, then, said the measures are meant to consolidate institutional controls, expand the scope of transparency and enhance accountancy and auditing , all of which are guaranteed by the electronic collection system.
The Finance Minister had, then, prevented any revenue collection outside the electronic collection system (called electronic form No.15). He said if this system is not available for any reason, the service (to the citizen) can be postponed or, else, be made for free. ‘’This is meant to reaffirm the state’s keenness to prevent the siding of cash and stem corruption,’’ he said.
Why Government Units Put Aside Some of their Earnings?
Economics lecturer at the International Open University Abel-Azeem al-Mahal attributes this practice to the ‘’ meagre government resources, where the Finance Ministry is unable to meet the demands of government units, thus forcing them to keep their money back to meet their expenses.’’
“These meagre resources have turned the Finance Ministry into a semblance of a subsistence body that spends all it has on wages of its employees, thus failing to meet the needs of the government bodies and their different projects,’’ he said.
“Some of the government units put aside some of their earnings because the Finance Ministry is unable to meet their requirements at the right time,’’ he said.
“Some of those units may have big revenue, but have commitments which, if not met, they cannot implement their plans,’’ he said.
“Sometimes those units are obliged to do so due to the slow office bureaucratic processes and in order to avoid them, they puts aside some of their earnings,’’ he added.
“In the case of Sudan and its thorny conditions, this practice can be due to political or security factors that need prompt spending and immediate cash. It could also be due to unfair and unlawful distribution of the government revenue,’’ he added.
Mahal, however, asserts that much of the money kept back by government units is spent on incentives for employees, travel expenses and lavish celebrations. Sometimes it could be used on basic infrastructures and improve the level of services commodities rendered to the public.
Many Harms and Hazards:
The Auditor General has said this practice on the part of government units obstructs the implementation of the national budget objectives and fails the country’s economic and financial indications and statistics. It also leads to a mismatch between money spending and the budget’s developmental priorities. “The money that should go to development can, in this way, be spent on incentives and bonuses,’’ he said.
“Moreover, absence of financial control creates an opportune environment for irregular financial dispensations that contradict the principles of transparency and accountability,’’ he said.
He said the practice has to be stopped and that all money should be spent with the full knowledge and consent of the Finance Ministry and in conformity with the general budget’s priorities.
For The Powerful Only!
Mahal says that after the application of the electronic collection system and the One Treasury System, the siding of money has become so difficult. ‘‘But unfortunately and regardless of these two supervision systems , some government units still keep aside public money and do not heed the law,’’ he warned.
Mahal noted that in most cases such units are ‘’ powerful’’ or ‘’ are presided over by a strong or influential person,’’ who can defy the law.
Mahal predicted that this practice would continue even when the economic and financial conditions improve because ‘’some people are inclined to break the law.’’
Former chairman of the parliament’s economic affairs committee Salim al Safi maintains that the electronic revenue collection and the One Treasury systems and their accompanying administrative decisions represent a true approach towards reforming the general budget and the Sudanese economy in general.
“They are good steps for closing the loopholes in the government’s accounting system and can prevent mismanagement of public money,’’ he said.
He said from what he has seen, those measures have cut the practice by 90%. ’’ By that we can say the Finance Ministry has restored its mandate on public money,’’ he said.
Chief of the electronic revenue collection unit at the Ministry of Finance Mohammad Tahir said since its inception six months ago the system had achieved a rise in government revenue, thus reducing the siding of that revenue. It has, accordingly, reduced fraud and other negative practices that prevailed during the use of paper receipts.
He said reports now speak about a hike in federal revenue of 23.7 % and 25.8% in regional revenue in 2015, as compared with the same period in 2014.
Director of auditing and inspection at the Exports Development Bank, Khalid al-Tahir Mohammad, has expected these systems to stem financial irregularities a great deal.
He said these arrangements can also help attract investors. They can also reduce government spending and cut imports that consume a lot of local hard currency as the siding of revenue had used to encourage government units to spend lavishly and import heavily.
E N D
YH/AS
Photo of the Week
Khartoum (Sudanow) — In just three days, the war in Sudan will complete its third year since it erupted on April 15, 2023. The conflict pits the Sudanese Armed Forces, supported by allied forces, against the rebel militia and its backers at both regional and international levels. Experts believe this war is no longer purely an internal affair; rather, it has evolved into...
More-
13 April, 2026
Stories from the Heart of the Battlefield War and the Growing Suffering of People with Disabilities
Khartoum (Sudanow) — As the war in Sudan enters its fourth year, and destruction has affected everyone, the suffering of people with disabilities has doubled. This vulnerable group faces severe risks due to war, displacement, and the difficulty of accessing medical and humanitarian aid, in addition to the near-total collapse of educational, medical, and rehabilitation services. To understand the scale of suffering and t...
Contact Us
Address: Sudan News Agency (SUNA) Building, Jamhoria Street, Khartoum - Sudan
Mobile:+249 909220011 / +249 912307547