Education official quizzed over sh800m

Jan 17, 2007

MEMBERS of Parliament have queried sh800m paid by the Government as penalty fee for undisbursed loans not absorbed by the Ministry of Education.

By Mary Karugaba
and Fortunate Ahimbisibwe


MEMBERS of Parliament have queried sh800m paid by the Government as penalty fee for undisbursed loans not absorbed by the Ministry of Education.

The Public Accounts Committee yesterday put to task the permanent secretary, Francis Lubanga, to explain why his ministry asked for funds that it could not utilise.

The committee chairman, Nandala Mafabi, observed that the Government was incurring a lot of penalty fees as a result of poor absorption of loans by ministries.

Lubanga told the MPs that the loan amounting to $20m (sh36b) was advanced to the ministry by the African Development Bank in May 2001 to finance the Education 11 project.

It involved the construction of schools, laboratories, libraries and procurement of textbooks.

Lubanga, however, blamed the Ministry of Finance for negotiating the terms of the loan poorly. According to the agreement, Lubanga explained that the Government pays the penalty at a rate of 0.5% per year on the undisbursed portion of the loan.

Lubanga was appearing before the committee to answer queries raised by the Auditor General in the 2004/05 financial year report.

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