Parliament has approved a government request to borrow up to Shs.2 trillion (approximately €500 million) from the African Export-Import Bank (Afreximbank), Eco Bank Ltd, and the Development Bank of Southern Africa to finance the 2024/25 national budget.
The approval came despite strong objections from opposition Members of Parliament (MPs), who questioned the urgency of the loan just weeks before the end of the financial year.
While presenting the loan request, Finance Minister Matia Kasaija told Parliament that part of the funds would be used to resume stalled infrastructure projects, including the Mityana–Fort Portal road.
“In accordance with Article 159 of the 1995 Constitution, Section 34 of the Public Finance Management Act, 2015 (as amended), and Rule 155 of the Rules of Procedure, I move a motion for a resolution of Parliament to approve borrowing of €270 million from Afreximbank and €230 million from Eco Bank and the Development Bank of Southern Africa,” Minister Kasaija said.
The minister also acknowledged the impact of the loan on Uganda’s debt stock, which, as of June 2024, stood at USD 25.55 billion up from USD 23.67 billion in June 2023. Of that, USD 14.59 billion is external debt, while USD 10.96 billion is domestic.
The loan request was met with resistance from opposition MPs led by Muwanga Kivumbi (Butambala County) and Karim Masaba, who argued that the request lacked urgency and proper justification.
“We are speaking to a minister who already has Shs.16 trillion in undisbursed, unutilized loans. We are paying interest on borrowed money that’s sitting idle. The Bank of Uganda holds Shs.222 billion that remains unutilized. This is part of the crisis the Attorney General has repeatedly raised—Parliament approves loans without the necessary preconditions,” said Kivumbi.
He added, “The financial year is closing in less than a month. The minister must demonstrate his ability to absorb and utilize this money in time.”
Other MPs accused the government of using the loan to fund political activities ahead of the general elections.
“Let it be clear we are not against the loan itself. What concerns us is the timing and the new conditions attached, including commitment fees, management fees, agency fees, and the use of a commercial tranche,” said Theodore Ssekikubo (Lwemiyaga County).
“We are borrowing from commercial banks that ordinary Ugandans also rely on, yet middlemen will likely profit from this deal.”
Eddie Kwizera (Bukimbiri County) questioned the lack of prior planning, adding that a loan with a 7% interest rate qualifies as commercial borrowing and therefore requires serious justification.
“This budget is now in its twelfth month, and the minister has failed to explain the delays in sourcing funds earlier. Why is Parliament being rushed to approve a commercial loan?”
According to Supplementary Schedule 3, out of the Shs.2 trillion loan request, the Ministry of Defence was allocated Shs.186 billion, while Treasury Operations received Shs.380 billion. The Uganda Police was allocated Shs.190 billion, the Ministry of Works received Shs.61 billion, and the Ministry of Health was allocated Shs.12 billion. Other allocations were also made, with further details pending full disclosure by the Ministry of Finance.
