Parliament in June 2020 discussed and forwarded up to 10 loan requests worth UGX2.5 trillion for consideration to the National Economy committee in the wake of the Coronavirus (COVID-19).
The 2.5 trillion or US$674 million comes just a month after Parliament approved 2.9 trillion shillings to mitigate the effects of COVID-19.
According to documents seen by Uganda Radio Network -URN, the 10 loan requests were introduced by the Ministry of Finance to Parliament in the month of June alone. The requests were made as follows; on June 17th, a loan request of UGX628 Billion from the International Development Association (IDA) of the World Bank to support irrigation for climate resilient project, UGX111 billion from Exim Bank of India for supply and installation of solar powered water pumping systems for areas with lowest safe water coverage.
On June 18th, Ministry of Finance presented another loan request of UGX873 Billion from the African Development Bank to finance the construction of three major national roads of Namagumba-Budadiri and Nalugugu of of 29 kilometres, Katuna-Muko-Kamuganguzi of 104 kilometers, and Laropi-Moyo- and Afoji in the South Sudan border of 37 kilometres.
Another loan request of UGX254 billion from the African Development Fund to finance the Kabale-Lake Bunyonyi-Mgahinga road upgrading project, and UGX289 billion from AFD for Water and Sanitation in Isingiro. On June 22nd, the Ministry again tabled a loan request of UGX31 billion from UNICREDIT Bank of Austria for the construction and equipping of an Oncology and diagnostic centre in Gulu district.
On June 30th, the Minister of Finance Presented a proposal for Government to guarantee Uganda Development Bank (UDB) to borrow UGX318 billion from European investment Bank, International Islamic Trade Finance cooperation, OPEC fund for international Development and Arab Bank for Economic Development in Africa and Kuwait fund for Arab Economic Development.
These loans are now before the National Economy committee of Parliament which is supposed to advise Parliament to reject or approve the loans.
Although there are concerns that Government is over borrowing, the Finance Ministers have told the country that Uganda’s debts are still manageable.
Unplanned borrowing
However, Uganda Debt Network says Uganda’s borrowing does not appear to be adequately planned since some loans take years to be used even after it has been borrowed at huge interest rates.
Julius Kapwepwe of Uganda Debt Network says that as the civil society, they remain concerned about the huge and ever increasing appetite for loans, which include commercial loans that are piled on Ugandans at a very high interest rates.
Kapwepwe says that it is also unfortunate that Government is borrowing against low utilization of some loans, like loans of rural electrification. He says Government is also not discussing with Ugandans who are the recipients of the loans or beneficiaries to inform them of the magnitude of a specific loans acquired. He says the loans also face accountability issues since they are in trillions. Kapwepwe says now Uganda should look at less borrowing and see prudent use of its domestic resources.
Patrick Isiagi Opolot, the Kachumbala MP and Vice Chairperson of the budget committee says such borrowing is worrying, saying the rate of borrowing for the Government has gone high.
Opolot says that Uganda is now tending to a dangerous loan level, and as MPs, they are waiting for the assessment of the committee on National economy on loans, and this should guide the house on how they can proceed.
He said: “Your debts are like more than half of your assets; that’s very dangerous. It means you are headed for real swallow up, so it is something to worry about. We should not take it lightly because we speak now, we could be around 42% of the GDP…”
