Uganda Debt Network asks MPs to reject loans they have not approved

By Mary Karugaba

With an increased loan burden to the tax payer and some not performing, the Uganda Debt Network has asked MPs to reject any loan request that is signed by the ministry of Finance without prior parliamentary approval.

According to section 20(3) of the Public Finance and Accountability Act, 2003, the loan shall be laid before Parliament and shall not come into operation unless they have been approved by a resolution of parliament.
 

However, while appearing before the Economy Committee on Thursday, a team from Uganda Debt Network led by Juliet Akello, a programme officer said in 2012, government signed 13 new foreign loans worth sh1.3trillion contrary to the law.
 

This, according to the officials, has increased Uganda’s level of indebtedness from $2.4b about (sh6trillion) in June 2007 to $6.4b about (sh16 trillion) in December2013
 

“If a loan is to be acquired with upright intensions, then there is no need for stealthily signing loan agreements without the knowledge of Parliament. If you (MPs) rejected such loans, it would send a signal to Finance and they would be extremely conscious when signing any new loan,” Akello said.
 

Efforts to get a comment from finance officials including the minister, Maria Kiwanuka, were futile.
 

Matia Kasaija, state minister for Planning declined to comment saying it’s not his portfolio.
 

“I know but there’s a way we operate. You call the main minister,’ he said. When Kiwanuka was contacted, she could not pick the calls.

A report by Uganda Debt Network tracking Uganda’s external and internal debts since 1980 indicates that the external debts had shot to $5.6b about (sh14trillion) by end of 2012 from $732m about (sh1.8b) in 1980.

The report indicates that over $3.01b about (sh7.6trillion) of the debts has been disbursed while another $2.5b about (sh6.3 trillion) was yet to be disbursed.
 

Akello told the MPs that $2.5billion (sh6.3 trillion) continues to accumulate interests before the money is spent on intended purposes.
 

To limit on commitment fees charged on undisbursed loans, Akello asked MPs to demand proper project planning and appraisals from government agencies before approving the loan.
 

She further asked Parliament to demand for tough penalties to accounting officers that fail to comply with policies and regulations as provided for in the law.
 

This is addition to a debt strategy that limits the financial risks of government debt. The 2007, debt strategy expired but has been reviewed and not yet approved.
 

The national debt strategy that has been guiding the borrowing process expired in 2012. The Ministry of finance is yet to come up with another strategy to guide the borrowing in the next five years.
 

The committee chaired by Xavier Kyomya expressed concern that at this rate, debts are likely to take up all money meant for service delivery for critical areas like health and agriculture.
 

Dr. Lulume Mayiga however criticized the team for coming out when the loans have already been approved.

“You should give this information to the committee at the scrutiny stage so that we are able to reject or approve it based on the information you have provided,” he said.
 

Patrick Mulindwa said Parliament should come up with strict criteria on loans so that whatever is approved benefits the population and meets all the requirements.
 

Kyomya however said the committee should meet the team again with the Minister of finance over the matter.