Having read a lot of discourse on the virement of funds to constitute the D500 million COVID-19 Fund, I wish to share the following thoughts based on the following Questions:
a) Is there a conflict between the Public Finance Act 2014 (PFA) and the 1997 Constitution?
b) What constitutes virement within the contemplation of PFA?
c) Whose approval is required to undertake virement?
d) Is the virement to constitute the D500m COVID-19 Fund wrong, or right?
On the question whether a conflict existed between PFA and the Constitution, the simple answer is there is none. The PFA was made pursuant to the provisions of Chapter IX, Part I of the Constitution on Public Finance. The preamble of PFA which explains why the law was enacted is connected and derived its source of power from many of the provisions of the Constitution, including s. 151(2).
On the Question of what constitutes virement within the contemplation of PFA, recourse should be made to section 2 of the PFA which defined virement as “a transfer of appropriations within the expenditure items of a budget agency, or among expenditure items of the budget agencies under the same Supervising Department or from one budget agency to another.” There are three elements in the definition: Transfer of appropriations WITHIN the expenditure items of the budget agency (e.g. within the budget lines of the ministry, government organization office, etc.,); transfer of appropriations AMONG the expenditure items of the budget agencies under the same supervising department (e.g. a ministry which coordinates the operations of one or many offices, government organizations, departments, etc.); and transfer of appropriations FROM one budget agency to another (e.g. from Department of Forestry to Department of Fisheries). In all these circumstances, the sums to be vired must come from the expenditure item which must have been appropriated to the budget agency by the Appropriation Bill.
On the question of who approves virement, recourse is made to s.29(4)(a) -(c) and ss. 5 to (8). PFA allowed virement from the expenditure item of the appropriations of the budget agency on the following conditions:
1. For virement among the expenditure items of the budget agency of not more than 75%, the agency must REQUEST and the Minister is the APPROVING authority.
2. For virement among budget agencies under the same supervising Department of not more than 50% of the total appropriations of the giving and receiving expenditure items of each budget agency, the Supervising Department must REQUEST and the Minister’s APPROVAL must be received.
3. For virement among budget agencies, the minister’s APPROVAL is required and he MUST CONSULT the vote controllers of the agencies.
In the above three circumstances, the minister is merely the approving authority. The National Assembly’s approval is only required in the virement process when the amount to be vired from the expenditure items of the budget agency exceeded 75%. Thus, if the National Assembly Finance Select-Committee wants to determine the compliance of the Minister of Finance to the virement process, it must demand from him the following evidence: the budget agency’s request for virement, the Supervising Department’s request for virement, and budget agencies’ request as well as his approval and evidence of consultation with the vote controllers. Without those evidence, the virement process should be considered flawed and illegal.
Finally, on the question of whether the D500m COVID-19 Fund was wrongfully or rightly constituted through virement, recourse should be made to the foregoing explanations. The highlighted circumstances in which appropriations of the expenditure items can be vired cannot be applied to the D500m COVID -19 Fund. The first circumstance relates to a budget agency’s request for approval to vire within its expenditure items; the second situation relates to the request by the Supervising Department to vire funds from among budget agencies’ appropriations; and the third situations relates to the request of budget agencies to vire funds appropriated to them. There is no provision in the PFA that gives the Minister power to vire appropriations of the expenditure item of the budget agencies. He has the APPROVING power and nothing more. Equally, it was wrong and offensive to the Constitution and PFA for an expenditure item to be created within the national budget which was already approved into an Appropriation Act.
Many legal avenues were and are available to the minister to take. One of them is the revising of the budget with changes on the expenditures and laying the Revised Budget before the National Assembly for approval.