Parliament has approved a government proposal to borrow over UGX1.9 trillion from both local and international commercial lenders to finance the national budget, just weeks before the end of the 2024/25 Financial Year.
The approval followed a request tabled by Finance Minister Matia Kasaija during the May 29, 2025, plenary sitting, which also marked the end of the Fourth Session of the 11th Parliament.
Details of the Loan Request
“My Ministry has concluded negotiations for Euro500 million (approximately UGX1.92 trillion) to finance approved expenditures,” Kasaija informed Members of Parliament (MPs). He elaborated that this includes a loan of Euro270 million from the African Export-Import Bank and up to Euro230 million from Ecobank Uganda Limited.
According to documents submitted to Parliament, the African Export-Import Bank loan features a 10-year repayment period with a three-year grace period and a one-off arrangement fee of 1.75%.
The terms for the Ecobank Uganda Limited and Development Bank of Southern Africa (DBSA) loans include a 7-year repayment period for the commercial tranche (Euro130 million) and 10 years for the development finance tranche (Euro100 million).
Minister’s Urgency and Parliamentary Concerns
Minister Kasaija’s declaration that the money could be spent “before the weekend” raised eyebrows among MPs. “If you give me the authority, this money will go out to the spenders before the weekend comes,” he stated. “There are expenditures in the Treasury now that we must pay using modern systems by the end of the weekend.”
Bukimbiri County MP Eddie Kwizera criticized the Finance Ministry for rushing the request, arguing that Parliament had not been given sufficient time to scrutinize the proposal. “A loan with a 7% interest rate is a commercial loan,” he stressed. “Why the rush? If the Ministry of Finance were planning properly, we wouldn’t be here at the end of the financial year being asked to rubberstamp this.”
Kwizera also pointed out that Parliament had already approved the expenditure side of the budget under the assumption that funds were available. “Now we are being asked to approve borrowing as the financial year closes. This undermines Article 90 of the Constitution and makes Parliament look incompetent,” he added.
Government’s Justification and MPs’ Questions
Government Chief Whip Hamson Obua explained the delay, citing prolonged negotiations with lenders. “We approved a supplementary budget on March 12, 2025. Part of this loan will fund that supplementary,” he said.
Speaker Anita Among acknowledged MPs’ concerns but emphasized the urgency of the matter. “Yes, the financial year is ending, but should salaries go unpaid and roads remain unfixed? The Minister is saying we need this money to meet our obligations.”
However, Butambala County MP Muwanga Kivumbi questioned the need for new loans when UGX16 trillion in previously borrowed funds remains undisbursed, yet still accrues interest.
“We have UGX222 billion sitting unused in Bank of Uganda accounts. The system closes on June 15. That gives only two weeks, including time to transfer funds from lenders,” he argued. “Unless this loan has already been secured and the Minister is seeking retrospective approval, this process raises constitutional concerns.”
Kivumbi further criticized Parliament’s lax oversight, citing repeated warnings by the Auditor General about poor loan absorption. “Parliament approves loans without ensuring proper safeguards. We’re failing in our oversight role,” he said.
In response, Kasaija defended the request, asserting that the funds were urgently needed to clear outstanding contractor payments, particularly for infrastructure projects like the Mityana–Mubende road. “I’ve failed to pay the contractor due to lack of resources. The year is ending, and we must settle these debts. This money is not for consumption,” Kasaija stated.
Divisions in the House
Moroto County MP Samuel Okwir urged colleagues to support the loan, highlighting the importance of completing public infrastructure projects. “We must support government to access these funds so that services reach Ugandans,” he said.
Bukooli North MP Stephen Baka moved a motion to suspend Rules 162(2), (3), and (4) to allow the loan debate to proceed without referral to the Committee on National Economy. He justified the move by pointing out that the House was being prorogued and time was limited. “This House is the committee of last resort. Since we’re here, let’s handle the matter now. Agencies need this money, and government must not be stalled for lack of funds,” Baka argued.
Conversely, Kalungu West MP Joseph Ssewungu opposed Baka’s motion, insisting that the Minister of Finance should have formally moved the motion himself. “Baka has no justification. It doesn’t look proper. It’s rushed and it’s ugly,” he said.
Despite the objections, MPs voted in favor of Baka’s motion, allowing the loan approval to proceed.
According to the Finance Ministry, the loan will slightly increase Uganda’s total public debt stock, which stood at US$25.55 billion by June 2024—up from US$23.67 billion the previous year.
