Members of Parliament sitting on the Committee on National Economy have tasked the Government through the Ministry of Finance Planning and Economic Development to provide a breakdown of how the planned 1.750 trillion Shillings (US $464 million) loan will be spent.
The Committee asked Henry Musasizi, the State Minister for Finance the details of the proposed expenditures during a meeting at Parliament on Wednesday before they can approve Government’s request to borrow.
Muwanga Muhammad Kivumbi, the Shadow Minister of Finance asked for the details of the loan disbursement arguing that there are looming fears among the lawmakers that the money could be misappropriated to cater for consumption goods.
Kivumbi’s submission was supplemented by John Bosco Ikojo, the Bukedea County Member of Parliament and the Committee Chairperson who demanded a schedule to enable easy tracking of the loan once approved.
The lawmakers demanded to know why the Ministry of Finance didn’t approach the lenders directly instead of using Standard Chartered Bank to obtain the loan facility and faulted the Ministry of Finance for ‘bad negotiation’ for the 1.750 trillion Shillings loan that attracts a 10 percent (175.080 billion Shillings) insurance premium paid upfront for the 10-year duration repayment period.
Musasizi told the MPs that Standard Chartered Bank “emerged the best bidder with the lowest cost of financing provided to the government.” Up to £272 million of the loan will be sourced from Nippon Export and Investment Insurance (NEXT), a Japanese trade and investment insurance firm, while £182.7 million from the Islamic Corporation for the Insurance of Investment and Export Credits (ICIEC).
Separately, Musasizi also tabled a 529.259 billion Shillings loan request to be picked from the International Development Association – IDA. The facility comes with a 226.397 billion grant expected to finance the Uganda Digital Acceleration Project (UDAP) to expand access to high-speed internet and strengthen the digital inclusion of the host communities and refugees.
Further, the Government is processing another 1.250 trillion Shillings loan request to be sourced from the same agency, which comes with a grant totaling 1.043 trillion Shillings to facilitate the financing of the electricity access scale-up projects.
Minister Musasizi said the loan is critical in electricity access expansion across the country, targeting at least one million electricity connections covering households, commercial enterprises, industrial parks, mining centers, and public institutions.
The committee is expected to write its report and present it to Parliament for consideration. Currently, the Government seeks to borrow 3.5 trillion Shillings to finance development and infrastructure budgets, projects they say were affected by the domestic revenue deficit induced by the economic slowdown.URN
