1.7 trillion shillings loan from commercial banks not a silver bullet – government

The FThe Ministry of Finance has said that a loan proposal request for 455.03 million euros (about 1.7 trillion shillings) which was recently presented to Parliament is not “a quick fix”.

The ministry said in a tweet on Monday that this money to be borrowed from Standard Chartered Bank and other commercial banks is part of the scheduled budget funding for this financial year 2022/23 already approved by Cabinet and Parliament.

Out of the budget of 48.1 trillion shillings for this financial year 2022/2023, the government released 10.25 trillion shillings in the first quarter and 7.3 trillion shillings in the second quarter.

In the first quarter, only 10.25 trillion shillings were released out of the 14.57 trillion shillings expected on the grounds that the government was controlling inflation.

Request permission to borrow

Finance Minister Matia Kasaija has written to parliament asking for urgent permission to allow the ministry to borrow up to 1.7 trillion shillings from these banks to fund part of the development and infrastructure budget for this exercise.

New Vision has seen a copy of an opinion from the Clerk of Parliament, summoning the members of the National Economy Committee for an urgent meeting tomorrow, November 1, 2022.

“Notice is hereby given that the National Economy Committee will have a meeting with the Ministry of Finance to consider an urgent mission to review the government’s request to borrow up to 455 million euros from the Standard Chartered Bank and other financial institutions and to report to the House on Wednesday, November 2, 2022,” reads a notice to members, signed by committee clerk Glorious Kamayangi, on behalf of the Clerk of Parliament.

Last month, the opposition in parliament demanded that the Ministry of Finance explain why it had delayed the payment of its exceptional advance of 11 trillion shillings borrowed from the Bank of Uganda (BOU).

In a statement presented to Parliament, Shadow Finance Minister Muwanga Kivumbi said that although the Public Finance Management Act requires the government to pay its debts to the BOU within the borrowing year, the ministry hasn’t done it yet.

“This conflicts with the mandate of the BOU as provided for in the Bank of Uganda Act,” Kivumbi noted.

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