Parliament had authorized the government to borrow up to 445 billion Shillings (101.88 million euros) from the UK Export Finance for the development of the solar-powered irrigation and water supply system, a project which seeks to develop 920 water supply systems for both domestic use and irrigation nationwide over a three-year period.
According to the report, 17 loan request proposals authorizing government to borrow were approved. These were tabled by government through the Ministry of Finance, Planning and Economic Development and considered by the House National Economy Committee.
Domestic Borrowing is done through the issuance of government securities like treasury bills which are short term debt instruments with tenures ranging from 91, 182 and 364 days and treasury bonds with a maturity period of more than a year.
Ruhinda North MP Thomas Tayebwa says that many businesses are facing challenges accessing loans because of the COVID-19 risks, and fears that as the government moves to borrow, many banks will withhold money from Ugandans with the hope of lending to the government.
Anna Merrified, the European Union Acting Head of Delegation, said every ambassador has interest in attracting foreign investors to Uganda but warned of the risk of pitying local producers against their foreign counterparts.
On Thursday afternoon, Gulu Municipality Member of Parliament, Lyandro Komakech raising on a matter of National Importance in parliament, said the behavior of the financial firms is hurting school teachers who are already suffering because of the lockdown.
The 10 loan requests were introduced by the Ministry of Finance to Parliament in the month of June alone. They came just a month after Parliament approved another 2.9 trillion Shillings to mitigate the effects of COVID-19.
He adds that they intend to provide liquidity support to SACCOs and microfinance institutions, ensure revision of interest rates to borrowers, support SACCOs to develop new products, and capitalize the capacity building department at Uganda Retirements Benefits Regulatory Authority (UBRA) among others.
According to the Association’s Executive Director Wilbrod Owor, in the first month of restructuring, commercial banks received more than 750,000 restructuring applications. Of these, 755,000 requests worth 2.028 trillion Shillings were approved.
However, in a letter dated April 4, 2020, the president rejected the loan on the forest and resilience landscape project and the additional financing for intergovernmental fiscal transfers. He said he has a problem with the Ministry's lack of seriousness and failure to use clear language in seeking for the loan.
Government tabled a proposal to borrow US Dollars 219.40 million approximately Shillings 831.56 billion from the African Development Bank (ADB) and US Dollars 55.60 million approximately 210.73 billion from the African Development Fund to finance the Kampala City Roads Rehabilitation Project (KCRRP).
Lawrence Bategeka, the National Economy Committee Vice Chairperson told URN that all approved loans requests were important and majorly meant to finance the National Budget especially due to inadequate revenue collection.
Some of the areas include medium scale Irrigation schemes in Kabarole, Oyam, Kween, Nebbi, Butaleja, and Omoro. Others are small scale Irrigation schemes Arua, Ntoroko, Ibanda, Dokolo, Butambala, Gomba, Rukungiri,Kisoro,Kaabong, Napak,Manafwa among others.