Govt revises proposal to acquire loans for COVID-19

Kampala, Uganda | THE INDEPENDENT | Government has revised its proposal to borrow money to mitigate the effects of coronavirus by up to 1.3 trillion shillings.

On April 2, the government presented a motion to borrow up to 1.7 trillion shillings to cushion the economy from the effects of COVID-19. This figure has now been revised upwards to 2.9 trillion Shillings.

During plenary on Wednesday, David Bahati, the Minister for Planning told Parliament that following the International Monetary Fund (IMF) and the World Bank’s decision to increase its funding proposal towards COVID-19 and support to economies, the government has sought to withdraw the earlier loan proposals and replace them with new ones since figures and dates had changed.

The government had earlier on tabled a loan request of 719 Billion Shillings from the World Bank’s International Development Association (IDA) to provide sufficient financial resources to the health sector and mitigate the effects of COVID-19 on the economy of Uganda but this figure has been revised upwards to 1.1 trillion shillings, a difference of 416 billion Shillings.

For Balance of Payments support to Bank of Uganda (BoU), the government has also revised this loan request upwards by an additional 912 billion shillings. Initially, the government had requested to borrow 946 billion Shillings but the new figure now is 1.8 trillion Shillings.

Balance of Payments is the record of all economic transactions between the residents of the country and the rest of the world in a particular period of time.

According to Bahati, of the 1.8 trillion shillings, 1.2 trillion shillings will help BoU in bridging the gap in the balance of payments position while 117 billion shillings will be used for budget support to finance government’s response plan to the pandemic. Another 454 billion Shillings will support the private sector through the Uganda Development Bank (UDB) by boosting their capacity through loans.

Aruu County MP Odonga Otto demanded to know how much money Uganda has in its reserves and the debt portfolio saying government was borrowing too much.

Igara East MP Michael Mawanda called on government to give a comprehensive statement on the economy and what is needed instead of borrowing too much simply because the IMF and the World Bank decided to give more money.

For the proposal to borrow from the African Development Bank (ADB) to fund the Kampala City Roads Rehabilitation project, this has been revised by six billion shillings taking the figure to one trillion shillings.

“The changes in the loan amounts and disbursement periods requires a formal withdrawal of the loan requests from Parliament and submission of a new loan request,” Bahati told the house.

Parliament forwarded the loan request of 2.9 trillion shillings to the National Economy Committee for scrutiny.

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