KAMPALA, UGANDA: Members of Parliament on the budget committee yesterday quizzed officials from the Central Bank for allegedly attempting to seize powers of Parliament when they extended a loan of Shs3 trillion to government without seeking parliament’s approval.
Appearing before the committee on Tuesday, the Deputy Governor Bank of Uganda Deputy, Dr Michael Atingi-Ego, said the Shs3 trillion funding was extended to government through liabilities of matured securities that the Central Bank paid on behalf of the government, but despite the promise to have the money paid in two years, no penny has been paid.
He, however, defended the decision to pay the securities on behalf of the Ministry of Finance revealing that the Central Bank and the Ministry have a memorandum of understanding where the bank is required to redeem maturing domestic security obligations.
Dr Antigi-Ego added that the government is mandated to pay the Central Bank but in 2020/2021, the Ministry found difficulty in honouring its obligations due to the effects of the COVID-19 pandemic.
Tororo North MP, Geoffrey Ekanya, described the arrangement as indirect borrowing, wondering why the Central Bank didn’t seek Parliamentary approval to engage in such an arrangement with the Ministry of Finance.
BoU earlier this year highlighted that it was not true that government took any loan from BoU but there were initial plans to take an advance in FY2021/2022 as per the Public Finance Management Act (PFMA) provision of accessing 10 per cent of revenue. This did not materialise.
“What we are aware of, is when the government securities that have been issued mature, BoU immediately redeems those securities and then makes a claim and waits for a reimbursement from government,” Mr Atingi-Ego stated in January while appearing before the Parliamentary Finance Committee.
As the government continues to borrow heavily to plug revenue shortfalls, the country’s public debt stock hit Shs80 trillion in November 2022, with a constrained resource envelops amid growing spending appetite, something that raises serious legislative concern.
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