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Parliament rejects UGX484b capitalisation request by Bank of Uganda

Parliament reduced Shs484.2b capitalisation request BoU to Shs200b. (PHOTO/FILE)

PARLIAMENT – The request by Bank of Uganda seeking for capitalization to a tune of  Shs484.2b has been rejected by MPs on grounds that the figure wasn’t justified and asked to have the funds reallocated to other sectors and instead reduced the figure to Shs200b.

While presenting report on the ministerial policy statement for the Ministry of Finance on Friday, Henry Musasizi, Chairperson Parliamentary Finance Committee informed Parliament that in 2016/2017, Bank of Uganda was capitaiized by Shs100b and were shocked by the Shs484b recapitalization request, which he described as ambiguous.

Mr. Musasizi told the Committee that; “Whereas the bank needs to be capitalized from time to time to maintain a sound capital base, the Committee found an increase from Shs100b to Shs484.21b representing an increment of 384% in a period of 2 years is unjustified. The Committee noted the need for gradual and consistent increments in budget allocations for capitalization of the bank.”

He asked Parliament to uphold the Committee’s recommendation to have the Shs284.21b be reallocated from Treasury Operations specifically Bank of Uganda capitalization to other priority sectors to meet the funding as will be identified by the House.

It should be recalled that in the 2017/2018 annual by the Bank of Uganda, it was revealed that the Central Bank is undercapitalized to a tune of Shs468,864b with the report highlighting that as per the Bank of Uganda Act section 14(3), the issued and paid-up capital of the Bank shall be a minimum of Shs20,000Trn but as at June 30th 2018, the core capital of the Central Bank was below minimum required capital by Shs468,864Bn in 2017.

There was a request to recapitalise the Central Plans by Government to a tune of Shs500Bn but the request was rejected after MPs threw out the proposal warning Ministry of Finance against cutting deals with tax payers’ monies.

Hon. David Bahati, State Minister for Planning took to the floor to table the addendum to corrigenda to the draft budget estimates for treasury operations FY 2018/2019 in May 2018 but Parliament rejected the corrigenda, after Amos Lugoloobi, Chairperson Budget Committee protested the tabling of the corrigenda saying it would distort budget process.

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