Government to borrow 2.9trillion to to mitigate the effects of COVID-19
Government has amended the proposal to borrow loans to mitigate the effects of COVID-19 by up to 1.3 Trillion shillings.
On April 2nd, 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 higher to 2.9 trillion shillings.
During plenary on Wednesday evening, David Bahati the Minister of Finance in charge of planning said following the International Monetary Fund (IMF) and the World Bank’s decision to increase their funding proposal towards COVID-19 and support to economies, they have sought to withdraw the earlier loan proposals and replace it 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 effects of COVID-19 on the economy of Uganda, but this figure has been revised upwards to now 1.1 trillion shillings, a difference of 416 billion shillings.
For Balance of payment support to Bank of Uganda (BoU), the government has also revised this loan request upwards by additional 912 billion shillings. Initially, the Government had requested to borrow 946 billion shillings, but the new figure now is 1.8 trillion shillings.
According to Bahati, of the 1.8 trillion shillings, 1.2 trillion shillings will help BoU in bridging the gap in the balance of payment positions and 117 billion shillings will be used for budget support to finance Governments response plan to the pandemic, while 454 billion shillings will support the private sector through the Uganda Development Bank (UDB) by boosting the capacity their capacity through loans.
Aruu County MP Samuel 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 because the IMF and 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 6 billion shillings taking the figure to 1 trillion shillings.
Parliament forwarded the loan request of 2.9 trillion shillings sending it to the National Economy Committee for scrutiny.