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Auditor General To Audit Govt’s Shs243bn Loan Guarantees To Private Sector

 John Muwanga, the Auditor General

The Speaker of Parliament, Anita Among has directed the Office of the Auditor General to conduct an audit into the US$65 Million loans (about Shs243.409Bn) that Government has guaranteed to the private sector players.

Speaker Among made the directive while receiving audit reports on Classified expenditure, forensic audit investigation report into covid funds 2019-2021 as well as forensic audit reports into procurements at Parliament where she asked the Auditor General, John Muwanga to also direct his efforts in loans guaranteed by Government.

“Because there are entities we guaranteed through the sovereign guarantee, what happens if they don’t pay the money? Do we have a take on it? Do we audit them? Do we know what they are doing? Do we even know when they pay the money and in case they fail to pay the money, who pays the money? So we should be able to look at all these entities and ensure that the debt is paid so that the Government that guaranteed you isn’t in problems,” remarked Speaker Among.

The Report On Public Debt, Guarantees, Other Financial Liabilities And Grants For Financial Year 2020/2021 by the Ministry of Finance indicates that there were seven (7) Active guarantees out of the two entities Uganda Development Bank Limited (UDBL) and Islamic University in Uganda (IUIU), which amounted to a total of US$65 million about (Shs243.409Bn) as at 31st December 2020.

According to the Ministry of Finance, Islamic University in Uganda a private education institution held 11 percent (US$3.1 Million) of total disbursed and outstanding stock and UDBL, a public financial corporation held 89 percent (US$25.3 Million) of the total disbursed and outstanding stock out of (USD 28.4 Million) as at 31st December 2020.

IDB was the top guaranteed creditor with a guaranteed amount of US$29.01 Million, followed by African Development Bank (AfDB) with US$15 Million, Arab Bank for Economic Development in Africa (BADEA) with US$6 Million and the lowest was India EXIM Bank with USD 5 Million.

The current exposure of the Government to the disbursed and outstanding guaranteed debt stands at US$ 28.4 million as at end December 2020, indicating a 2.4 percent decrease from USD 29.1 million as at end December 2019. The decrease was mainly due to total repayments of USD 11.5 million and additional disbursements of USD 10.6 million under UDBL. Under IUIU, the increment of USD 0.18 million disbursed and outstanding as at 31st December 2020, was due to additional disbursements and the foreign exchange rate differences between 2019 and 2020.

The Ministry of Finance’s report also revealed that as at 28th February 2021, there were five guarantees in the pipeline awaiting parliamentary approval, totalling to US$ 85.8 million. All five guarantees will be credited to one beneficiary, UDBL, mainly to facilitate the import of goods and services in the Trade sector.

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