The government is to pay Shs2.5 trillion to the Bank of Uganda (BoU) in matured securities after its repayment was disrupted by the advent of COVID-19.
The money is a domestic loan acquired by the government through the Bank of Uganda as an intermediary for individuals and companies’ payable within a specific period. The securities are usually paid within a specified timeframe and at a given interest.
The Deputy Governor of the Bank of Uganda, Michael Atingi-Ego made the revelation on Tuesday, 10 January 2023 while appearing before the Committee on Finance on Uganda’s economic performance outlook.
He told MPs that there is an outstanding Shs2.5 trillion for matured securities that the government has not reimbursed to the Bank of Uganda.
The Deputy Governor told the committee that the Central Bank had agreed with the government that the money is to be repaid over two financial years and this explains the Shs1.25 trillion reflected in the Budget Framework Paper for Financial Year, 2023/2024.
This followed an inquiry from the Chairperson of the Committee, Hon.Keefa Kiwanuka and his vice, Hon. Jane Pacuto Avur in regards to the domestic debt payment reflected in the Budget Framework Paper.
“The government owes the Bank of Uganda and this is believed because the minister by law is allowed any one time to run to you for cash but they have taken this money and for two financial years running, it has not been paid. What do you have to say?” Pacuto asked.
Keefa Kiwanuka said that the money is not clearly described in the Budget Framework Paper for the next financial year.
Atingi-Ego said that it was not true that the government took any advance from the Bank of Uganda in the last two financial years under the Public Finance Management Act provision of accessing 10 per cent of revenue.
“There were initial plans to take that advance in the 2021/2022 financial year but that did not materialize. What we are aware of, is when the government securities that have been issued mature, Bank of Uganda immediately redeems those securities and then makes a claim and waits for reimbursement from the government,” said Atingi-Ego.
He emphasized that the only money that the Bank of Uganda is expecting from the government is on account of matured securities that have been redeemed by the bank.