##ing unrealistic budgets have continued to be submitted as a matter of practice. this has often resulted into under or over budgeting. over budgeting has resulted into funds remaining unutilised and some planned projects not being carried out at all. under budgeting has resulted into funds rapidly being exhausted - in some instances, within a few months into the financial year. but even more serious, over budgeting and under budgeting have provided departments with the opportunity for virement. some departments now easily vire funds from non - performing budget lines to fund deficits in other lines. virement is usually only justifiable in unforeseen circumstances. producing realistic budgets which, reflect capacity to implement projects or carry out certain activities, would help reduce the time spent on reviewing the budgets at committee and board levels. let me now turn to the issue of the bank ’ s income. as you are all aware, we have witnessed a dramatic fall in the bank ’ s gross revenues in the last three years from shs. 97. 7billion in 2000 / 01 to shs. 70. 7billin in 2003 / 04 against a background of rising recurrent expenditures, which increased from shs. 79. 1billion in 2000 / 2001 to shs. 96. 7billion in 2003 / 04. the resulting diminished surpluses and large losses have been a major concern to management, the board and indeed government, which have not received any dividends since 2001 / 02. the main cause of this, of course has been the general decline and volatility in interest rates in the international markets during this period. the bank has also lost income from penalties levied against banks as well as loans to commercial banks both of which have continued to decline on account of strengthened supervision. income has also been forgone on the discounting of treasury bills. more seriously the margin on forex transactions, which has traditionally brought in the bulk of the bank ’ s income has had to be reduced from 1 % to 0. 5 %, as a result of the policy to transfer government project accounts to bou to help manage liquidity. clearly the above - described situation is unsustainable and the bank may have to adopt drastic measures including further rationalization of structures and staff to contain it. 3. late submission of performance assessment reports ( pars ) last year, prompt submission of reports to help generate analysis for feedbacks and management decisions were not easily forthcoming. first

david g opiokello : bank of uganda - recent achievements opening address by mr david g opiokello, deputy governor of the bank of uganda, on the occasion of the senior management workshop for the fy2005 / 2006 work plan and budget preparations, entebbe, 4 march 2005. * * * ladies and gentlemen : i welcome you all to this annual event. i would like to thank all bank staff who have been effectively participating in the implementation of the strategic plan 2003 - 2008. allow me to mention a few achievements. • the issuance of 2, 3, 5 and 10 year government bond was successfully done. • the bank successfully implemented automation of currency note processing. • the rtgs has been launched while that of the foreign exchange application had reached the stage of identifying the winning bidder. • on the capacity building front, the bank trained a number of staff on professional and academic courses, and most staff are now computer literate. • the installation of the internet link was a tremendous success for the bank. it has enormously eased communication both internally and externally and also helped to improve positively the perceptions of staff and external persons on the bou operations. last year around the same time in jinja, we resolved that this event is necessary for overcoming some of the challenges the bou faces in drawing up budgets and work plans. however, in spite of the resolutions we made last year the challenges in implementing and monitoring the current budget and annual work plans have remained onerous. i wish to point out three areas of major concern : 1. absence of the linkage between planning and budgeting best practice requires that annual work plans be closely linked with the budget. last year the budgeting exercise was carried out before agreeing on work plans. this caused a mismatch between planned activities and resources, with the resulting risk of making the whole work planning process irrelevant. part of this problem was caused by functions and departments not submitting their budgets and work plans according to the agreed submission calendar. it is, therefore, not surprising that the budget and work plans were approved late - in september 2004 for the budget and october 2004 for the annual work plans. to overcome this problem this year, we must strictly adhere to the timetable for submission of departmental budget proposals and work plans, which should then fit consistently into the overall budget. it means that functions and departments should give due time to the process so that documents are ready and approved according to schedule. 2. over / under budget