Amos Lugoloobi, State Minister for Planning at the 2021/22 Budget reading
The International Monetary Fund (IMF) is said to have declined to extend any further lending to Uganda until Government pays the Shs8Trn loan it acquired from Bank of Uganda.
The revelation was made by Amos Lugoloobi, State Minister for Planning while appearing before Parliament’s Finance Committee on Monday, where he had been summoned to explain the recent budget cuts to Ministries, Departments and Agencies (MDAs) following release of funds for the first quarter of the 2022/2023 national budget.
Lugoloobi informed the Committee that the Public Finance Management Act allows Government to take short term credit from the Central Bank at 10% interest rate.
He said Government took on this route because of the COVID-19 related pressures, noting that the various lending institutions both the multi-lateral and bi-lateral weren’t then ready to lend Uganda money, prompting Government to resort to domestic borrowing.
“And as a result, we had some arrears with the Central Bank and you know this is short term credit so you can’t go beyond a certain ceiling, now here we are with this demand of Shs8Trn and our lender hasn’t been adequately serviced. The loan hasn’t been adequately serviced, so we have to go a little bit slow and I think that is a problem,” said Lugoloobi.
The Minister added: “We have agreed with some arrangement with IMF on that settlement and we are using our revenues to do the settlement and that is why we requested for some time to do that settlement and then the IMF has a facility available for us immediately after we have done good with that arrangement with the Central Bank.”
The interim total public debt stock as at end March 2022 was Shs75.675Trn, just about 49.4 percent of the GDP and the External debt continues to maintain the highest share (61.6 percent) of the total public debt.
The revelation prompted Muwanga Kivumbi (Butambala County) to criticise the Minister for hiding Uganda’s actual debt to the public, arguing that when Government speaks about money borrowed, from the debt obligation, it is quite different wondering if the said loan from Bank of Uganda is captured in the current public debt.
“I have had a long discussion with them that debt as reported is misleading, now IMF is getting us saying that we can’t give you more money until you have cleared your debt obligation with Bank of Uganda. Can the government be merciful to this country and tell us what is our actual debt obligation in the country; is it this one you report or we are dealing with a completely different animal to skin so that we know the state of our economy,” said Muwanga.
Minister Lugoloobi also said that because debt repayment takes the first call on the budget, it was the first item paid, leaving government with only Shs4.67Trn for discretionary expenditure, despite the target being Shs8.07Trn which is only 18.5% of the approved budget.
As such, the money was distributed to agencies with the request for wages being Shs1.595Trn but the Ministry released Shs1.6Trn, while the non-wage request was Shs3.4Trn and Shs1.8Trn was released, while the request for development expenditure was Shs2.4Trn but only Shs596Bn was released and while the request for arrears was Shs661.95Bn, only Shs661.4Bn was released.
