KAMPALA — Budget Committee of Parliament has summoned Central Bank governor Pro Tumusiime Mutebile to defend Bank of Uganda persistent requests for recapitalisation.
Prof Mutebile is set to appear today, Tuesday January 2020 to explain why Central Bank has been pushing for recapitalisation for the past three financial years.
The Central Bank in its 2020/2021 framework paper submitted to Parliament, it needs UGX 481.7 billion as a bailout after a whopping loss of made losses to a tune of UGX 855 billion up from the UGX424 billion in profits it recorded in 2018.
The proposal became a subject of contention when the Finance and Planning State Minister, David Bahati appeared before the budget committee to defend the National Budget Framework Paper.
committee members tasked the minister to explain why parliament should approve the proposal for BOU recapitalisation.
The members directed that Mutebile to appears today before the committee.
The committee’s reservation for recapitalising BOU is shared by the Leader of Opposition in Parliament, Betty Aol Ocan.
In her alternative Budget Framework Paper, Ocan says that the continuous need to recapitalise BOU could be a sign of financial indiscipline.
She is concerned that BOU has been seeking bailouts annually yet it should perform better than the banks it supervises as a lead agency of monetary and fiscal discipline.
Parliament approved UGX. 210 billion to recapitalise BOU in the 2017/2018 and UGX. 200 billion in 2019/2020 financial year.
The Bank of Uganda Act 2000 states that the authorized capital of the Bank of Uganda may be increased by a resolution of parliament to ensure adequate operations of the bank.
However, the Accountant General, Lawrence Ssemakula told Parliament last year that BOU has suffered deficits since June 2013 and thereby needs money urgently to avert an impending crisis.
The budget committee is expected to present a report to the House by the end of this week.
The Public Finance Act, 2015 provides that Parliament must approve the NBFP of the next financial year by February 1st each year.