Rwanda: Public Servants Must Compensate Financial Losses in 30 Days

• Public servants in Rwanda must now repay financial losses to institutions within 30 days of notification, as per Article 84 of new rules.
• Unpaid government bills become classified as arrears after 90 days and must be categorized by type and prioritized for settlement.
• Petty cash holdings in public institutions are capped at Rwf1 million, with individual payments limited to Rwf100,000.
• New regulations require written approval from the National Treasury for opening or closing bank accounts or changing signatories.
• These comprehensive public finance management rules were published in the Official Gazette on October 30, enhancing accountability and control.

New regulations mandate that public sector employees deemed accountable for financial shortfalls or harm to government entities must reimburse the affected organizations within 30 days of receiving formal written notification.

New regulations mandate that public sector employees deemed accountable for financial shortfalls or harm to government entities must reimburse the affected organizations within 30 days of receiving formal written notification. This obligation, detailed under Article 84 of the updated Rwanda public finance management rules, specifies that the Chief Budget Manager is responsible for issuing this written notice, outlining the exact amount owed and demanding repayment. Should an employee fail to comply with this directive, the matter will be escalated to the appropriate judicial authority for resolution.

Exceptions to this strict repayment rule exist for losses stemming from unavoidable circumstances, which may be written off with the approval of a central government entity head or the Executive Committee of a decentralised body; a copy of this decision must be forwarded to the Accountant General. Similarly, financial losses resulting from criminal acts or omissions can be waived if a thorough investigation confirms that the funds or property cannot be recovered. Furthermore, Article 85 imposes a duty on public servants to immediately report any discovered or suspected losses of public money or property to their direct supervisors, with copies sent to the asset management official and the Chief Budget Manager, ensuring all reported incidents are fully investigated with institutional employee cooperation.

The new public finance management rules introduce a more stringent system for monitoring outstanding government payments, requiring public institutions to categorize all unpaid bills on a monthly basis according to their age. Article 72 establishes four distinct classifications for these bills: those outstanding for less than 45 days, between 45 and 90 days, between 90 and 180 days, and finally, those exceeding 180 days. Any bill that remains unsettled for more than 90 days is now formally designated as an arrear.

Beyond simple classification by age, these arrears must be further broken down by expenditure type, encompassing categories such as employee benefits, pensions, trade payables, international contributions, subsidies, and grants. Public institutions are now mandated to prioritize the clearance of these accumulated arrears and other outstanding payments before addressing current financial obligations. The Ministry of Finance and Economic Planning bears the responsibility for settling any remaining arrears at the close of the financial year, particularly when delays are attributable to the National Treasury's failure to process valid payment instructions within the stipulated timeframe.

The new regulations also impose stricter controls on expenditure authorization and petty cash limits within the Rwanda public sector. Article 48 stipulates that all expenditures must be properly authorized, requiring confirmation that goods, services, or other assets have been duly received, and that supporting invoices are provided before any payment is processed. This aims to enhance transparency and accountability in financial transactions.

Under Article 57, the amount of petty cash that public institutions can hold for minor, incidental expenses is now capped at Rwf1 million at any given time, with individual payments from this fund limited to Rwf100,000. Institutions are also required to reconcile their imprests at least once a month, and finance units must submit reconciliation reports to the Chief Budget Manager. Furthermore, Article 61 prohibits central government entities, decentralised entities, and their subsidiaries from opening or closing bank accounts or altering authorized signatories without explicit written approval from the National Treasury management function. Institutions must maintain three authorized bank-account signatories, and all payment orders and cheques must adhere to prescribed signing requirements. Human resource officers are also now required to submit monthly reports detailing employee numbers, salary grades, and staffing changes, including departures and abandonment of duty, with unclaimed salaries mandated to be deposited intact into the bank and reported to the National Treasury.

These comprehensive new rules, officially published in the Rwanda Official Gazette on October 30, signify a significant overhaul of public finance management across the country. They introduce a heightened level of scrutiny and accountability for public servants and institutions alike, aiming to safeguard public funds and ensure fiscal discipline. The emphasis on timely repayment for financial losses, meticulous tracking of outstanding bills, and stringent controls over cash and banking operations reflects a concerted effort to enhance the integrity and efficiency of government financial processes.

The implementation of these regulations will necessitate a thorough review and update of internal policies and procedures within all public entities. The detailed requirements, from the 30-day repayment obligation for financial losses to the strict limits on petty cash and the categorization of public institutions unpaid bills, underscore a commitment to robust financial governance and risk mitigation throughout the Rwandan public sector.

Lawyers advising public servants or institutions in Rwanda must understand the new 30-day repayment obligation for financial losses and the stricter reporting requirements for public funds to ensure compliance and mitigate legal risks. Compliance officers need to update internal policies for financial management, arrears, and petty cash limits to align with these new regulations.

Source: Original reporting via The New Times