Finance ministry makes case for Shs1.7 trillion Stanchart loan
The Ministry of Finance Planning and Economic Development Monday met with the committee of parliament on National Economy to discuss the proposal of borrowing up to Euro 455.03m (Shs1, 734.3bn) from Standard Chartered Bank & other Financial Institutions.
According to the ministry, this financing which is part of quarter 2 cash limits of the financial year 2022/23 will support the budget as appropriated by parliament early in May 2022 and will only be disbursed to the government once the loan is approved by Parliament.
In a letter to the committee, the ministry also highlighted that the funds will help pay outstanding infrastructure certificates, among others, to avoid accumulating arrears during the financial year.
The ministry added that due to funding constraints, the government-funded only seven percent of the FY Q1 (Quarter One) development budget.
In addition, the letter revealed that legislatures on the committee are to have 3 days so as to evaluate and approve the request of loan by the government, then prepare and table its report by November 2nd.
Relating to the public debt of the country, the ministry noted that this increased to 48.58% by the end of June 2022.
“The nominal value of public debt as a percentage of GDP stood at 48.58 percent as at end June 2022, increasing from 46.70 percent registered in June 2021. Similarly, the Present Value (PV) of total debt to GDP increased from 37.60 percent as at the end of June 2021 to 40.17 percent in June 2022.” The letter read in parts.
According to Henry Musasizi, the minister of state for general duties, the country is likely to experience more loans until the budget is fully financed.
He said the resource envelope structure for the budget for this financial year includes loans, grants, domestic financing, project support among others and warned MPs that he will continue presenting such requests until the budget is fully financed.
On September 21, 2021, the government made a call for interested financiers to provide the loan.
Several banks, including Africa Finance Corporation, Citi Bank Uganda Limited, Stanbic Bank Uganda Limited, Standard Chartered Bank Uganda Ltd, the United Bank of Africa Uganda Ltd, MUFG, Trade Development Bank, African Trade Insurance Agency, First Rand Bank, Africa Finance Corporation and Absa Bank, among others, responded to the call.
A review of their financing proposals followed and Standard Chartered Bank United Kingdom emerged as the best bidder, with the lowest financing terms.
