Parliament has deferred consideration of loan requests by government aimed at capitalising and guaranteeing acquisition of additional loan financing for and by the Uganda Development Bank (UDB) Limited.
The government had sought the House’s approval to borrow up to US$125 million from the Arab Bank for Economic Development in Africa (BADEA) and US$25 million from the OPEC Fund for International Development to capitalise UDB.
The Executive also sought approval to guarantee UDB to borrow US$40 million from the Islamic Development Bank, US$30 million from the Islamic Corporation for the Development of the Private Sector and US$30 million from the International Islamic Trade Finance Corporation.
While presenting a report on the loans, the Chairperson of the Committee on National Economy, Hon. John Bosco Ikojo recommended that the House approve the loan requests save for those from the Arab Bank for Economic Development in Africa (BADEA).
Ikojo said that the committee did not receive draft financing agreements from BADEA and submissions regarding the proposed borrowing through the private window, from the financing institution.
He added that the draft financing agreements are key in reflecting the agreed terms and conditions between the lender and borrower.
“The draft financing agreements in relation to the credit facilities from BADEA should be submitted to enable Parliament consider their terms and conditions in accordance with Article 159 of the Constitution and Section 36 of the Public Finance Management Act,” said Ikojo.
He also urged the Minister for Finance to always demonstrate that the loan proposals submitted to Parliament result from well sourced affordable financing, to minimise the growing debt servicing needs of the country.
A minority report presented by Hon. Hassan Kirumira (NUP, Katikamu County South) proposed that the President’s proposed loan interest of 12 per cent per annum from UDB, be reduced further to less than 10 per cent per annum to enable all Ugandans to access credit facilities.
“The committee also needs to visit the UDB project beneficiaries to ascertain the exact impact of these loans on the wanainchi,” Kirumira added.
The Speaker, Anita Among said the information gap must be cleared before the House grants approval for the loan requests.
“It is good for us to give UDB money but we should not give it in bits. Let us get a wholesome amount we can approve. We also need to see the due diligence that was done by the UDB Board, then we will have these loans approved,” said Among.
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