Finance & Banking

Gov’t starts payment of Shs 2.5 trn matured securities

KAMPALA– 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 Central Bank 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 BoU, Michael Atingi-Ego made the revelation Tuesday while appearing before the Committee on Finance on Uganda’s economic performance outlook.

He told legislators that there is an outstanding Shs 2.5 trn for matured securities that the government has not reimbursed to the Bank of Uganda.

Atingi-Ego told the committee that the Central Bank had agreed with  government that the money is to be repaid over two financial years and this explains the Shs 1.25 trn reflected in the Budget Framework Paper for Financial Year, 2023/2024.

This followed an inquiry from the Chairperson of the Committee, Keefa Kiwanuka and his vice. 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 BoU in the last two financial years under the Public Finance Management Act provision of accessing 10 percent 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 emphasised 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.

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