Dr. Michael Atingi-Ego, the Deputy Governor, Bank of Uganda
The Bank of Uganda (BoU) has denied claims by Ministry of Finance that they sought for Shs481bn to recapitalize the Central Bank, describing the request as impractical.
This is after , the Henry Musasizi Chairperson Finance Committee queried the perennial recapitalization requests to Bank of Uganda, saying the proposal raises suspicion that the government could be siphoning funds, while hiding behind the Central Bank.
Musasizi made his concerns known during a meeting of Members of Parliament on the Budget committee and officials from the ministry of finance and the National Planning Authority on Monday over the budget estimates for next financial year.
MPs raised questions after Minister of Finance, Matia Kasaija requested the Budget Committee to approve the Shs481bn to recapitalize the Central Bank in 2021/22.
“This financial year running, we recapitalized Bank of Uganda by the same amount and also when you look at the projections, in the subsequent financial years they also plan to continue recapitalizing the Bank. I want to know the underlying factors, I know the Minister has always come up with justifications but we want to know if capitalization is one of the routes that you have started using to siphon money because we can’t understand,” Musasizi said.
This prompted Patrick Isiagi, Vice Chairperson Budget committee to task the Minister to explain the continuous recapitalization of the Central Bank, to which the Minister committed to summoning BOU to defend the recapitalization.
Appearing before the Budget Committee on Monday, Dr. Michael Atingi-Ego, the Deputy Governor, Bank of Uganda said that the Central Bank couldn’t have requested for Shs481bn as purported by Ministry of Finance in the 2021/2022 National Budget Framework Paper because the Bank’s books for the same financial year haven’t been audited to establish the capital position of the Central Bank to warrant its recapitalization.
Atingi-Ego explained that once the audited accounts for any financial year are finalized, then the level of recapitalization is determined whether the capital is impaired or not and should the capital be impaired, it is only at such a point when BOU requests the Ministry of Finance to present to Parliament a request for recapitalization.
“More recently in 2020/2021 the accounts of Bank of Uganda were audited and the big picture is that Bank of Uganda made a modest profit of Shs40bn and as such, Bank of Uganda isn’t requesting for any recapitalization because the capital isn’t needed. There is no basis for requesting for recapitalization,” the BoU Deputy Governor added.
Atingi-Ego said that the last recapitalization request made by Bank of Uganda was in 2018/2019 to a tune of Shs481bn and the money was wired in July 2020 and no other request has been made.
The Deputy Governor’s request angered MPs led by Jane Pachuto (Vice Chairperson Finance Committee) who tasked Minister Kasaija to reveal who engineered this recapitalization, but instead, Isiagi (Vice Chairperson Budget Committee requested the MPs to have the matter discussed out of camera and thanked Atingi-Ego for being straight forward.
The Committee is scheduled to present its report on the Budget Framework Paper to the Plenary on Thursday at 2:00pm.
