Govt has no debt with us, Bank of Uganda says
KAMPALA-The Bank of Uganda [ BoU ] in the latest media statement has come out to refute claims that government excessively borrowed money from the institution and failed to pay it back.
A leading daily in the country over the weekend claimed that government has excessively borrowed from BoU to the tune of Shs 11 trillion.
“The article stated that Government of Uganda has excessively borrowed Shs 11trn from BoU outside the permissible limits,” emphasises BoU in a statement.
BoU clarified that Section 4 of the Bank of Uganda Act, 2000 mandates it to perform the functions of Banker to Government and Agent of Government in financial matters.
BoU clarified that Section 4 of the Bank of Uganda Act, 2000 mandates it to perform the functions of Banker to Government and Agent of Government in financial matters., 2000 and the Public Finance Management Act, 2015 [as amended], the statement read in part.
In line with these laws above, BoU says government obtained an advance of Shs 2.1trn in the financial year 2020/21, which was subsequently repaid in full. “Since then, no such borrowing has taken place. Therefore, Government has not borrowed Shs 8trn and there is no such outstanding loan to BoU as purported in the article.”
As an Agent of Government in financial matters, BoU manages the issuance and redemption of domestic debt securities on behalf of Government. This entails prompt repayment of matured government securities to investors. The current outstanding amounts due from Government to BoU relate to reimbursables attributed to this role.
According to BoU, as at June 30, 2021, the outstanding reimbursables to BoU stood at Shs 3.033trn. During the financial year 2021/22, BoU made repayments of matured securities to investors worth Shs 11.940trn and received reimbursements from Government worth Shs 11.602trn. “Therefore, Government’s outstanding reimbursables to BoU as at 30 June 2022 stood at Shs 3.371trn.
In the current financial year, BoU says it has made further repayments of matured securities worth Shs 2.510trn and received reimbursements from Government worth Shs 1.871trn; resulting in outstanding reimbursables of Shs 4.010trn as at 15 September 2022.
“Detailed plans for Government to fully reimburse BoU, on account of this role, are in place,” adding 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 law.”
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