The Ministry of Finance and Economic Development is to borrow USD 500m (Shs1.9 trillion), to recapitalise Bank of Uganda and Uganda Development Bank (UDB), due to effects of Coronavirus on the economy.
The ministry’s move to borrow such a huge amount of money was by the request of President Yoweri Museveni to save the central bank from collapsing.
Currently according to some sources, Bank of Uganda is almost depleting it’s 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.
Therefore this forced president Museveni to pen down a letter to the Minister for Finance Matia Kasaija to approve the loan from International Monetary Fund (IMF).
In the latter dated 6 May, Museveni explained to Kasaija, that the first approval of the proposal to borrow USD350M (Shs1.3 trillion) is for Balance of Payment support to the bank. While the second is to borrow USD150m (Shs658.4m) as a line of credit to the Uganda Development Bank.
“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,” Said Museveni.
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