Govt Requests To Borrow 1.73TN For Budget Support
MPs Concerned With Non-Favorable Terms Of The Loan
The Ministry of Finance has presented before the parliament’s committee on National Economy a request to borrow 1.73 trillion Shillings to finance the country’s development and infrastructure budget for the current financial year.
The commercial loan to be obtained from the Standard Chartered Bank UK and other institutions has concerned MPs with its tough terms.
The minister of state for finance Henry Musasizi has today appeared before the parliament’s committee on National Economy which was urgently called from recess and presented a formal request to borrow up to Euro 455.03 million from the Standard Chartered Bank UK and other financial institutions including Abu Dhabi Fund for Economic Development.
Musasizi justified that the government needs the Euro 455.03 million (approximately Shillings 1.7 trillion) commercial loan to finance the development and infrastructure budget for the financial year 2022/2023 as it was indicated by the government during the passing of the budget.
Since the new financial year started on July 1, 2022, there has been an apparent lack of resources as several government entities continue to report shortages in staff salaries, and development budget, among other expenditure limitations. Musasizi noted that this loan is aimed at saving the government from accumulating a lot of arrears in this financial year.
However, committee members were concerned with tough loan conditions wondering why the government goes for commercial loans instead of concessional loans that have more favorable terms. They cited a short repayment period of only six years with only four years grace period on top of a high-interest rate.
Other legislators queried the procedure used by parliament to process this loan, wondering how the government’s request to borrow found its way to the committee of National Economy before it laid in Parliament as parliamentary rules of procedures provide.
The committee has tasked the ministry of finance to unpack projects meant to benefit from this loan for proper supervision and oversight plus a report on the performance of the previous loans.
The National Economy committee is expected to report back to parliament on Wednesday this week.
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