The value of Uganda’s contingent liabilities has increased to USD75.076 million (about Shs278.5bn) as at December 2019 due to the sovereign guarantees government provided to Uganda Development Bank Ltd (UDBL) to enable the entity access financing from India and African Development Bank, a February 2020 report by Parliament’s National Economy Committee has revealed.
The report is set to be tabled and debated by MPs next week.
The sovereign guarantee has also enabled the recapitalization of UDB to increase its lending portfolio.
The performance of the guarantees indicates that the majority of the guarantees are being repaid by the various institutions that obtained the sovereign guarantees apart from the guarantee to Rift Valley Railway (RVR) which is nonperforming since the credit was not disbursed by the World Bank and more so RVR was repossessed by Uganda Railway.
The report adds that Government guaranteed two loans for Islamic University in Uganda in 2004 and 2010 to a tune of USD4.302Million and USD983,888, putting Government’s exposure to USD3,055,811Million if the University fails to pay up the loan to Islamic Development Bank.
Government also guaranteed two loans to Uganda Development Bank in 2017 worth USD26Millions putting Uganda’s exposure to pay up the loans to USD16.858Millions as at December 2019. The four loans thus put Uganda’s exposure at USD19.913Mn as at December 2019.
The Committee in its recommendations to Parliament noted that Government should undertake a value for money audit in all enterprises that have benefited from government guarantees.
