Parliament Backs Shs 5.2 Trillion in Loans for Development Initiatives

parliament backs shs5 2 trillion in loans for development initiatives
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The Parliament of Uganda has granted approval for three loans amounting to over Shs5.2 trillion in a session held on Wednesday, December 6, 2023. The allocated funds include Shs3.5 trillion from local commercial banks to support the supplementary budget, Shs1.227 trillion from the World Bank for smart agriculture, and Shs554.689 billion from China to finance the e-government infrastructure project phase.

This latest approval contributes to the country’s growing debt, which stood at over Shs88.80 trillion by the end of August 2023, deepening concerns about a looming debt crisis.

During the session, the majority of National Resistance Movement (NRM) legislators, led by Speaker Anita Among, overcame opposition resistance and successfully passed the entire loan amount. The loans are designated for key national projects, including the e-government infrastructure and smart agriculture initiatives.

The Committee’s report recommended approval for the loans, citing the need for financial support for the National Data Transmission Backbone Infrastructure/E-Government Infrastructure Project Phase V and the Uganda Climate Smart Agricultural Transformation Project (UCSATP).

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However, opposition members raised objections, particularly concerning the Shs3.5 trillion allocated for the supplementary budget. They argued that some of the funds the government sought to borrow were already available, questioning the necessity of additional borrowing.

The government’s supplementary request included Shs1.9 trillion for parliamentary approval before spending, along with another Shs1.56 trillion within the 3 per cent limit authorized by the law. Despite the argument that the Shs1.56 trillion had already been spent and brought to parliament for retrospective approval, the government included the same amount in its borrowing request.

Muwanga Kivumbi, the Shadow Minister of Finance, accused the government of financial indiscipline, stating that borrowing when part of the money is already available is not prudent. The minority report echoed concerns about financial indiscipline and warned that unchecked borrowing could lead to a disaster.

The government countered these arguments, asserting that the money swept back at the end of the last financial year is not available, and what they seek is new money that will be borrowed. The majority voted in favor of the loan approval, dismissing concerns raised by the minority about potential misuse of taxpayers’ money and further debt distress.

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