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Bankers Decry Govt's Failure to Clear Domestic Arrears

Speaking at the Annual Bankers Conference at Serena Hotel this morning, Mweheire said the government arrears have now exceeded one trillion Shillings and advised that Ministry of Finance should put in place mechanisms to clear all the arrears on time.
Finance Minister Matia Kasaija accused accounting officers of government ministries and agencies for increasing arrears

Audio 5

The Uganda government has continued to default on the payment of domestic arrears, impacting negatively on the operation of commercial banks. This is according to Patrick Mweheire, the chairman of Uganda Bankers Association and CEO of Stanbic Bank Uganda.

Speaking at the Annual Bankers Conference at Serena Hotel this morning, Mweheire said the government arrears have now exceeded one trillion Shillings and advised that Ministry of Finance should put in place mechanisms to clear all the arrears on time.

Mweheire earlier this month told Uganda Radio Network that the commercial bank's loan portfolio stands at about 10 trillion Shillings. He said that the government unpaid loans have increased the non-performing loans in commercial banks and affected the bank's ability to lend.

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Mweheire said the judiciary is equally not helping banks to recover loans. He said it takes between 7 to 10-years to resolve disputes in courts, an inefficiency which people have used to dodge loan payments.

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Speaking at the same function, Finance Minister Matia Kasaija said that the government is aware of unpaid arrears and is committed to clearing them. He said that 735 billion Shillings has already been committed in the 2018/19 financial year for domestic arrears repayment, a double of what was provided in the 2017/18 financial year.

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But Kasaija pushed the blame of arrears to financial indiscipline of accounting officers of government ministries, departments and agencies. He said the accounting officers consume goods and services but fail to pay. Kasaija said Ministry of Finance has warned all accounting officers that they will be removed from office if they keep consuming services and fail to pay. No accounting officer, he said should make a commitment unless they the money to pay.

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Kasaija explained that some arrears accrue through uncoordinated and unauthorized recruitments by government agencies. He said agencies recruit workers and later fail to pay. Kasaija appealed to Prime Minister Ruhakana Rugunda who was also at the function to curb indiscipline among accounting officers.

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Kasaija, however, cautioned commercial banks to keep a close eye on their creditor rather than waking up when creditors have completely lost the money.

"If I was a bank myself, I would keep a close eye to all my creditors," he said. But banks, Kasaija said have been arguing that it would be expensive to keep watching all their creditors. Kasaija said banks should choose between non-performing loans and monitoring of creditors.