Opposition blasts government for overborrowing from Bank of Uganda, excessive spending
The provision permits the government to raise a loan from BoU provided it does not exceed 10% of the domestic revenue.
Opposition Members of Parliament (MPs) are appalled that the government of Uganda is revenue constrained and has turned to the coffers of the Bank of Uganda (BoU) to finance its extravagant spending.
Butambala County MP, Muwanga Kivumbi, presenting a statement on behalf of the Leader of Opposition on the Inability of the Government to Clear Statutory Obligations revealed that the government borrowed from the central bank beyond the statutory limits.
According to the MP, the government borrowed Shs8 trillion from BoU exceeding the statutory limit provided for under Section 36 of the Public Finance Management Act (as amended). The provision permits the government to raise a loan from BoU provided it does not exceed 10% of the domestic revenue.
Giving a background to the statement, Kivumbi reminded the house that on 8th July, the Permanent Secretary/Secretary to Treasury told Parliament that the expenditure limits for quarter one of the financial year 2022/2023 were Shs10.45 trillion catering for the period July to September 2022.
Of this, government financing amounted to Shs8.43 trillion while external financing amounted to Shs2.02 trillion. Ideally, Kivumbi said, expenditure limits are expected to be translated into releases.
Unfortunately, Kivumbi stated that it is not possible to determine how much has so far been released against the expenditure limits. He revealed that in the budget of FY2022/23, Shs25.78 trillion was approved as domestic revenue.
“Hence, the government is only allowed to borrow UGX2.57 trillion from the Bank of Uganda. The provision further demands that funds should be repaid from URA collections within the financial year in which it has been borrowed. However, the government has failed to repay funds that were borrowed in the past financial years,” Kivumbi explained.
Kivumbi, in his prayers, wants the government to brief Parliament on how much revenue has so far been collected by URA against its targets for quarter one FY2022/2023; how many releases have so far been made to each of the votes against the expenditure limits for quarter one FY2022/2023.
He also wants the government to assure Parliament of its ability to meet statutory expenses, particularly salaries in quarter one FY2022/2023; when local revenues will be remitted back to local governments; the repayments plan for outstanding balances for BoU and the level of implementation of the addendum of the Service Level Agreement with BoU that was expanded to include debt provision.