Published on 16/12/2023
Within a space of one week, Parliament approved loans amounting to over UGX 6.868 trillion, prompting fears within the public about Uganda’s sky rocketing public debt, which was reported to have hit UGX 88.807 trillion August 2023.
Last week, Parliament approved three loans including; the UGX 3.149 trillion that Government is going to borrow from local commercial banks to fund the UGX 3.5 trillion supplementary budget, while Parliament also approved the $325m (UGX 1.234 trillion) loan from World bank for climate smart agriculture projects.
Members of Parliament also approved a loan to a tune of Chinese Yuan 1,050,000,000 (UGX 554.689Bn) from China to finance the e-government internet infrastructure project phase.
The approval of UGX 3.149 trillion from the domestic market raised concern in public, after Government revealed that out of that loan portfolio, Government will spend UGX 2 trillion to pay Bank of Uganda, after the Central Bank met some domestic obligations on its behalf at the height of the COVID-19 pandemic.
As at June 2023, the Government owed the Central Bank UGX 4.8 trillion which had accumulated from Financial Year 2019/20. Members will recall that in order to support the recovery of the economy from the slow down brought about by the COVID-19, the Government expenditure was expansionary in order to provide a fiscal stimulus to various sectors of the economy. However, the Government was not able to fully fund its expenditure, said Henry Musasizi, Minister of State for Finance (General Duties).
The Minister said that since the Bank of Uganda met the Government obligations on domestic debt redemption and now that the economy is recovering and given the prevailing macro-economic conditions, it is important that the Government pays off its obligation to the Central Bank.
Parliament further chose to seal off their business for the 2023 calendar year in style by approving two more loan requests on Wednesday. These loans are; $295m (UGX 1.121 trillion) from Islamic Development Bank and $30m (about UGX 114Bn) from OPEC Fund for International Development to finance the upgrading of national roads.
Also approved was the Government’s proposed for pre-financing for the reconstruction of Masaka-Mutukula Road (89.5Km) and rehabilitation of Nyendo-Villa Maria Road (11Km), upgrading of 3.5Km access road to the UPDF barracks in Masaka, 3.5Km access road to Masaka Industrial Park & additional scope of 28.5Km for Kikagati-Kafunjo Road at UGX 692.680Bn, thus bringing the total amount of loans passed within a week to around UGX 6.868 trillion.
However, it was the loan for the long awaited Masaka-Mutukula Road that raised excitement from the Opposition after Minister Musasizi informed Parliament that the Government had reached an agreement with Chinese firm, Chinese Chongqing International Construction Corporation (CICO) to construct Masaka-Mutukula Road at a cost of UGX 691.680Bn and have the money paid within two years of the implementation of the project.
According to the Government, the CICO expressed interest in pre-financing this road starting for the financial year 2023/2024 on the understanding that the costs of the civil works undertaken will be repaid over a period of two years starting in the financial year 2025/26.
Masaka-Mutukula road is a critical link to the port in Dar-es-Salaam and the road will facilitate the construction of the East African Crude Oil Pipeline (EACOP). Therefore, it is important that its reconstruction is prioritized before the EACOP construction works reach the Ugandan side of the border. The reconstruction of the road cannot be financed within the 2023/24 and 2024/25 budget ceiling for UNRA since it is over committed during the mentioned two fiscal years with ongoing road projects and those already considered to commence in 2023/24, said Musasizi.
Leader of Opposition in Parliament, Mathias Mpuuga welcomed the construction of Masaka Mutukula Road saying it had become a monument of shame for Uganda and asked the Government to ensure never to repeat the mistakes it made when it delayed to rehabilitate the road.
I congratulate the Minister for finally working on the Masaka-Mutukula road, it was a monument of shame to the nature of neglect we can visit on ourselves on such an international highway that brings in a lot of revenue into the country. So, I hope that it will drive not only the face, but you drive through Tanzania and enter Uganda and then realize it is a whole new space on earth. It was a huge shame on us, I hope it will lift the image of the revenue in-flow in our country, said Mpuuga.
The LOP also called for regional balance when it comes to distribution of infrastructure projects, wondering why western region got oil roads, yet the coffee growing areas didn’t receive coffee roads despite supporting the country longer than oil has done.
I concur with you that finance and (Ministry of) works need to harmonize balancing, while we are going to work on that international highway, the hinterland feeding into that highway is terrible. I admire colleagues coming from oil districts, they have oil roads, for us the coffee farmers have never got coffee roads despite supporting this country for generations, he added.
Mpuuga isn’t the only leader in Parliament to raise concern over distribution of oil infrastructure projects. Two months ago, Deputy Speaker, Thomas Tayebwa called out the Government for taking all oil and gas related development projects to Western Uganda, in total exclusion of Northern Uganda, yet Nwoya district which has three oil wells has been shunned.
