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Parliament Approves Govt’s Request To Borrow Shs523bn For Digital Transformation

Parliament on Wednesday approved government’s request to borrow up to USD 140 million, an equivalent of 523.467 billion Shillings from the International Development Association – IDA of the World Bank to finance the Uganda Digital Acceleration Project – UDAP.

This follows a report of the Committee of National Economy after scrutinizing a request presented to the House by the Minister of Finance, Planning and Economic Development on November 1, 2022 to borrow up to Special Drawing Rights to finance Government Networks – GOVNET.

The loan facility is to help the Government to extend access to high speed internet in selected areas, improve efficiency in digital service delivery in selected public sectors and strengthen digital inclusion of selected host communities and refugees.

John Bosco Ikojo, the Committee Chairperson, also the Member of Parliament for Bukedea County said the project has four components that include; expansion of digital connectivity in selected areas that will cost about USD 86 million, an equivalent of 321.558 billion Shillings.

Digital transformation will cost USD 50 million, about 186.952 billion Shillings, promotion of digital inclusion of the host communities – USD 57 million (213.125 billion Shillings) and management – USD 7 million, about 26.173 billion Shillings of the USD 200 million, about 747,810 billion the total project cost.

However, Charles Tebandeke, the Member of Parliament representing Bbaale County in Kayunga District raised concern that the Committee should always attach a document that highlights the performance of previous loans borrowed by the Government to avoid mismanagement of funds.

According to the Draft Financing Agreement, the loan forms part of government’s approved budget estimate. He said the loan is offered for a period of 38 years inclusive of a six-year grace period.

Government embraced Information and Communications Technology – ICT to spur socio-economic transformation of the country as a way of improving efficiency and effectiveness in the delivery of services to the citizens.

In 2006, the government embarked on the National Backbone Infrastructure- NBI, also referred to as the Electronic Government Infrastructure – EGI project to cater for laying of Fibre Optic Cable – FOB in major towns to ensure the availability of high bandwidth data connection at reasonable rates.

The project also aims at reducing the cost of doing business in Government, improving communication between Government Ministries, Agencies and Departments – MDAs and reducing the need for officials to commute for meetings. The project was initially financed by the China Exim Bank.

Total Public Debt for Uganda currently stands at 78.799 trillion as of June 2022, an increase by 13 percent from 69.513 trillion Shillings as at the end of June, 2021. The debt stock consists of 48.136 trillion Shillings as external debt, while 30.662 trillion Shillings domestic debt.

As a share of debt to Gross Domestic Product – GDP Nominal Debt increased from 46.9 percent in June 2021to 48.4 percent in June 2022 performing with the thresholds of the charter for fiscal responsibility, while the present value of debt to GDP increased from 37.6 percent to 40.1 percent respectively during the same period.

According to the Bank of Uganda, public debt had increased to 80.044 trillion Shillings by the end of July 2022, translating to a debt to GDP ratio of 49.2 percent. The approval of the proposed borrowing, equivalent to USD 140 million, will increase the external debt exposure from USD 17.8 billion as of June 2022 to USD 18.34 billion inclusive of the recently approved budget support loan.

-URN

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