Uganda’s President Yoweri Kaguta Museveni has endorsed a request by the Ministry of Finance to borrow up to USD500M to recapitalize Bank of Uganda (BoU) and Uganda Development Bank (UDB), following the effects of Coronavirus (COVID-19) on Uganda’s economy.
The money, according to credible sources, will come from the International Monetary Fund (IMF) and will be channeled to supporting post COVID-19 measures in order to revive the economy that visibly looks to be becoming frail each day.
Museveni’s letter to Finance Minister Matia Kasaija allowing him to borrow the money
The president endorsed the Finance Ministry’s request in a letter dated May 6, 2020, addressed to the Minister for Finance Matia Kasaija, titled
‘REQUEST FOR APPROVAL OF THE PROPOSAL TO BORROW UP TO USD 35O MILLION FOR BALANCE PAYMENT SUPPORT TO THE BANK OF UGANDA AND USD150 MILLION AS A LINE OF CREDIT TO UGANDA DEVELOPMENT BANK FROM THE INTERNATIONAL MONETARY FUND TO ADDRESS THE EFFECTS OF COVID-19 IN THE FY 2019/20’, which reads in part thus;
“I have received your letter of the 29th of April, 2020, regarding the USD350 from the IMF to back up the Bank of Uganda foreign exchange position but also to build the capacity of the country through helping the private sector to manufacture what we need for the epidemic- medicines, diagnostics, PPE, vaccines, processed food, etc.
The money that goes to the Bank of Uganda is for balance of payments support. Balance of Payments supports does not only mean helping the country to import more but must also mean helping the country to import less by manufacturing these products here.
With this undertaking, I approve the loan.”
The development comes at a time when sources reveal that the Bank of Uganda is almost depleting it foreign exchange reserves after spending a lot of money on importing medical supplies and procurement of other necessary equipment to help the Ministry of Health and the National Task Force in the fight against COVID-19.