KAMPALA – The government has presented a motion before Parliament seeking approval to borrow Shs3T as budget support to avert effects of Coronavirus on Uganda’s economy.
The motion was on Wednesday tabled by State Minister for Planning, David Bahati who expressed government’s interest to seek funding from World Bank $300M (approximately Shs1.136T) for budget support for FY 2019/20 which to provide financial resources to the Health sector and $491.5M (about Shs1.859T) from International Monetary Fund (IMF) to support Bank of Uganda in stabilising Uganda’s currency.
Bahati told Parliament that although government had on April 2, 2020, tabled a Motion seeking Parliament approval to borrow a loan of up to $100M for FY 2019/20 and $90M for FY 2020/21 from the International
Development Association (IDA) of the World Bank Group to provide sufficient financial resources to the health sector and mitigate negative effects on the economy due to COVID-19; and $250M from the International Monetary Fund for Balance of Payments support to Bank of Uganda, Government had to revise the loan request.
According to Government, the World Bank informed the Ministry of Finance that they have increased their funding proposal towards COVID-19 from $100m for FY 2019/20 and $90m for FY 2020/21 to $300m in total for the FY 2019/20.
Additionally, the IMF also informed Government that it will provide emergency financing under Rapid Credit Facility (RCF) to about $500m instead of the $250m for Balance of Payments support to Bank of Uganda.
However, due to foreign exchange dynamics between the SDR and USD, the amount has now reduced to $491.5m.
Out of $491.5m,$340m will help Bank of
Uganda in bridging the gap in the balance of payments position in the FY 2019/20 and $31.5m will be used as budget support to finance government’s respond plan to the pandemic, including acquiring necessary health supplies (diagnostics kits, masks, personal protective equipment); supporting the vulnerable population, and $120m to support the private sector that has been affected by the adverse effects of COVID-19 by boosting the lending capacity of Uganda Development Bank (UDB).
The Minister told Parliament that the funds to UDB will support import substitution, export promotion, manufacturing and industrialisation activities to address the negative effects of COVID-19 in the economy in the FY2019/2020.