The Bank of Uganda (BoU), the country’s Central Bank is Shs481.7bn recapitalization in the 2020/2021 National Budget in order to execute its mandate of ensuring macro-economic stability.
However, lawmakers on Parliament’s Budget Committee are not contented with constant recapitalization of the Bank.
They have since summoned Prof. Emmanuel Tumusiime-Mutebile (pictured), the BoU Governor to come and explain the strategic issues behind the continued recapitalization of Bank that has been featuring in a number of budget proposals before Parliament.
Budget Committee Vice Chairperson, Opolot Isiagi Patrick together with the MPs say that Mutebile or his Deputy are the only authentic officers who should appear to explains the 481.7bn recapitalization request of the Bank.
Issuing the summons, Opolot Isiagi asked Minister of State for Planning, David Bahati to request Governor Mutebile to appear alongside Bank of Uganda and Ministry of Finance officials to explain the matter to the country.
Minister Bahati accepted the request and promised to ensure the Governor appears before the Committee over the issues of recapitalizing Bank of Uganda.
It should be noted that in 2019/2020 budget, the Ministry of Finance had proposed to recapitalize Bank of Uganda to a tune of Shs400Bn, but Parliament approved Shs200bn only.
In the 2020/2021 national budget, the Ministry further proposed to capitalize the Central Bank to the tune of Shs481.7bn. The debate around recapitalization of the Central Bank come at the time Auditor General, John Muwanga recently revealed that Bank of Uganda is under-capitalised to a tune of Shs671.7bn, warning that failure by the Central Bank to secure the said funding would pose risks to the operations of the Central Bank.
The revelations are contained in the 2018/2019 audit report of Bank of Uganda.
The audit report highlighted that as per the Bank of Uganda Act, Section 14 (3), the issued and paid up capital of the Bank shall be a minimum of Shs2 trillion.
As at June 30, 2019, the core capital of the Bank was below the minimum required capital by Shs671.712bn while in the same period in 2018, the Central Bank was undercapitalized to a tune of Shs482.7bn.