Gov’t seeks to borrow UGX 6 trillion to finance budget deficit

Kampala, Uganda | THE INDEPENDENT | Government has tabled before parliament another request to borrow up to 6.2 trillion Shillings to finance the budget deficit for the current financial year 2020/2021.

State Minister for Planning David Bahati who tabled the request said that of this, a total of 4 trillion Shillings is to be borrowed from the domestic market while another USD 600 million (2.2 trillion Shillings) will be borrowed from the International Monetary Fund (IMF).

But when the matter was presented before parliament, Dokolo Woman MP Cecilia Ogwal demanded that the government makes a formal request outlining what the money was meant to do since the items were not highlighted on the Order paper.

She wondered why the loan request was being sneaked on the floor of parliament yet the Minister had been invited to lay papers for another supplementary request.

Bahati explained that the outbreak of COVID-19 has greatly affected the economy of Uganda and economic growth projections were revised downwards from 6 percent to 4.5 percent in the financial year 2020/2021 due to the impact of the pandemic.

“Madam Speaker in the financial sector, the past the financial year 2019/2020 registered a shortfall in revenue collection of 1.2 trillion Shillings, and in the current financial year, we are registering a shortfall of 2.5 trillion Shillings due to the impact of COVID-19,” he said.

In May 2020, parliament approved a total budget of 45.4 trillion Shillings for the financial year 2020/2021 that kicked off on July 1, 2020. Out of this budget, 21.8 trillion Shillings is to be financed through revenue collection while 15 trillion Shillings is to be financed through external borrowing.

Now according to Bahati, 1.5 trillion Shillings has so far been raised from domestic financing leaving a deficit of 1.4 trillion Shillings to be raised from the domestic market to finance the budget. He also told parliament that the government has been having different financial pressures that were brought to the attention of parliament in different supplementary schedules.

He said that due to these and other pressures, the government has been forced to seek a loan to further finance the budget.

The Speaker of Parliament Rebecca Kadaga referred the loan request to the National Economy Commitee. Efforts by a section of MPs led by Kassanda North MP Patrick Nsamba Oshabe to debate the motion immediately were denied by Kadaga who directed them to present their views before the committee.

Besides the fresh loan request, Parliament is currently considering a supplementary budget request from government totaling 3.7 trillion Shillings also aimed to finance different activities in the budget.

The supplementary request is expected to finance a classified budget of up to 1.5 trillion Shillings for the Ministry of Defence and Veteran Affairs, State House and a cover a 20 percent contribution (201 billion Shillings) towards the construction of the 223 kilometres of roads in the Democratic Republic of Congo (DRC) among others.

Also covered under the supplementary is at least 23.81 billion Shillings to be transferred from Arua district to the newly created district of Terego, 2.091 billion Shillings for local governments response to COVID-19 and 4.5 billion Shillings for salaries for Mbarara and Jinja regional referral hospitals.

Up to 600 million Shillings will be for the purchase of transport equipment for the Presidential Advisor on Africa Growth Opportunity Act (AGOA) and 483 million Shillings will go to the Uganda Retirement Benefits Regulatory Authority (URBRA) and others.

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