Parliament has approved a government request to borrow up to Shs2 trillion from the African Export-Import Bank (Afrexim), Eco Bank Ltd, and the Development Bank of Southern Africa to finance the 2024/25 national budget—amidst stiff resistance from opposition MPs who questioned the urgency and timing of the move.
The loan comprises €270 million from Afrexim Bank and €230 million from a syndicated arrangement involving Eco Bank Ltd and the Development Bank of Southern Africa.
According to Finance Minister Matia Kasaija, the funds are needed to cover critical shortfalls in the budget, including financing for the long-stalled Mityana–Fort Portal road project.
“This loan will increase our debt stock,” Minister Kasaija told Parliament while tabling the motion.
“As of June 2024, Uganda’s total public debt stood at $25.55 billion, up from $23.67 billion in June 2023. External debt now constitutes $14.59 billion and domestic debt $10.96 billion.”
Kasaija defended the timing of the loan, citing legal provisions under Article 159 of the 1995 Constitution, Section 34 of the Public Finance Management Act, and Rule 155 of the Parliamentary Rules of Procedure.
However, opposition legislators led by Butambala MP Muwanga Kivumbi and Mbale City MP Karim Masaba questioned the rationale of rushing the borrowing request with just weeks left to the end of the financial year.
“We are speaking to a minister who has undisbursed borrowed money amounting to Shs16 trillion, lying idle while we continue paying interest,” said Kivumbi.
“There’s Shs222 billion sitting unutilized at Bank of Uganda. Parliament must not keep approving loans under these circumstances without a clear plan for absorption.”
Lwemiyaga County MP Theodore Ssekikubo warned that the timing of the loan request suggests it may be politically motivated, possibly to fund election-related activities.
“This is not just about the loan—it’s about how it’s being brought on the eve of the financial year’s end,” he said.
“We’re seeing hidden charges like commitment fees, agency fees, and commercial tranches. Meanwhile, there are middlemen waiting to cash in between government and the lenders.”
Bukimbiri MP Eddie Kwizera also expressed concern that the government was rushing Parliament into approving what he termed a “commercial loan” at a 7% interest rate without sufficient planning or justification.
According to Supplementary Schedule 3, the proposed loan will be distributed as follows: Shs186 billion to the Ministry of Defence, Shs380 billion to Treasury Operations, Shs190 billion to Uganda Police, Shs61 billion to the Ministry of Works, and Shs12 billion to the Ministry of Health, among other allocations.
Despite the concerns raised, the majority in Parliament voted in favour of the borrowing request, clearing the way for government to proceed with securing the funds.