Bank of Uganda, has dismissed reports that government has failed to pay it (Central Bank) Shs 11 trillion, it allegedly borrowed.
In a September 20, statement, the Central Bank was responding to an article titled: “Govt fails to pay Shs11t BoU debt,” published in the Saturday Monitor of September 17, 2022.
The article alleged that Government, has excessively borrowed (UGX 11 trillion) from the central bank (BoU) outside the permissible limits.
However, the Central Bank clarified that, “Section 4 of the Bank of Uganda Act, 2000 mandates BOU to perform the functions of Banker to Government and Agent of Government in financial matters. As a Banker to Government, BoU can grant advances to Government in accordance with the Bank of Uganda Act, 2000 and the Public Finance Management Act, 2015 (as amended).”
BoU added that in line with these laws, Government obtained an advance of UGX 2.1 trillion in FY 2020/21, which was subsequently repaid in full, saying, Since then, no such borrowing has taken place.
“Therefore, Government has not borrowed UGX 8 trillion and there is no such outstanding loan to BOU as purported in the article,” it said.
The central bank, noted that as an Agent of Government in financial matters, it manages the issuance and redemption of domestic debt securities on behalf of Government, and this entails prompt repayment of matured government securities to investors.
It explained the current outstanding amounts due from Government to BoU relate to reimbursable attributed to this role.
According to the Bank, as at 30 June 2021, the outstanding reimbursables to BoU stood at UGX 3.033 trillion, adding that During the FY 2021/22, BoU made repayments of matured securities to investors worth UGX 11.940 trillion and received reimbursements from Government worth UGX 11.602 trillion.
“Therefore, Government’s outstanding reimbursables to BoU as at 30 June 2022 stood at UGX 3.371 trillion,” the Central Bank revealed.
It says that in the current financial year (FY 2022/23), BoU has made further repayments of matured securities worth UGX 2.510 trillion and received reimbursements from Government worth UGX 1.871 trillion; resulting in outstanding reimbursables of UGX 4.010 trillion as at 15 September 2022.
“Detailed plans for Government to fully reimburse BOU, on account of this role, are in place” the bank added in its statement.
It further explained that the Service Level Agreement signed between Government and BoU is intended to operationalise the existing laws referred to above and does not purport to create or give any new mandate to BoU outside the laws.