Parliament has approved a 736 billion Shillings loan request by government for budget support. The loan is to cater for salary payments, payment of contractors by Uganda National Roads Authority UNRA, and buying food for the Uganda Police Force, the Army and Prisons among others.
Parliament has approved a 736 billion Shillings loan request by government for budget support. The loan is to cater for salary payments, payment of contractors by Uganda National Roads Authority (UNRA), and buying food for the Uganda Police Force, the Army and Prisons among others.
This followed the adoption of Parliament's National Economy committee report tabled by Chairperson Syda Bbumba.
The committee recommended for the approval of the loan from the domestic market to finance supplementary expenditure and mitigate revenue shortfalls being experienced in the 2017/2018 financial year budget.
According to government, revenues recorded a shortfall of 324 billion Shillings in just the first half of the current financial year and the overall revenue shortfall by the end of the financial year is projected to hit 659 billion Shillings. The Government had projected to collect 15 trillion Shillings in revenue.
In her report, Bbumba said that government borrowing can be sourced from either domestic or external sources and given the time constraint and the lengthy procedures involved in securing external financing, the only available option is to source the extra funds domestically.
“The projected revenue shortfalls and additional expenditure pressures have resulted into fiscal adjustments. Given the limited options for cutting the budget, there is need to undertake additional borrowing to finance critical government operations,” said Bbumba.
However, MPs lead by the Leader of Opposition Winnie Kiiza and Dokolo Woman MP Cecilia Ogwal raised questions on the increased borrowing saying that the domestic borrowing is likely to cripple the private sector in the country. The MPs also blamed government for poor planning.
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But Finance Minister Matia Kasaija said that with the shortfall in revenue, they can no longer manage the financial year 2017/2018 budget as approved by Parliament. He said that government is now planning to go to the market and raise bonds as well as treasury bills.
He also cited the need to compensate people affected by different projects in the country in order for the projects to proceed.
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Following this explanation, Deputy Speaker Jacob Oulanyah put the question for parliament to approve the loan with the MPs responding in affirmative.
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The loan request was first tabled on the floor of parliament by the State Minister for Planning David Bahati on February 9th and was subsequently forwarded to the Committee of National Economy for scrutiny.