Atingi-Ego together with the BOU Legal Counsel Margaret Kaggwa Kasule had today appeared before the Legal and Parliamentary Affairs Committee to respond to the proposed Constitutional Amendment Bill, 2020 introduced by Igara East MP, Michael Mawanda.
While scrutinising the Budget Framework Paper for the 2021/2022 financial year, MPs queried the allocation of another Shillings 481 billion towards the recapitalization of Bank of Uganda (BoU) for the second consecutive year.
The Pre-Election Economic and Fiscal Update issued by Moses Kaggwa, the Acting Director Economic Affairs says that the approved and disbursed loans led to a cumulative stock of 17.221 trillion in September, 2020.
Bank of Uganda in April 2020 granted permission to all banking institutions to provide credit relief through the restructuring of loans of both corporate and individual customers who were or would be affected by the COVID-19 pandemic.
According to the Central Bank Quarterly Financial Stability Review report, the Banking Sector remained adequately capitalized to absorb emerging shocks and that the capital increase was largely boosted by an improvement in aggregate profitability.
Domestic Borrowing is done through the issuance of government securities like treasury bills which are short term debt instruments with tenures ranging from 91, 182 and 364 days and treasury bonds with a maturity period of more than a year.
BoU Governor Emmanuel Tumusiime Mutebile issued the warning on Thursday while appearing before Parliament’s National Economy Committee, where he was summoned to discuss the impact of the COVID-19 pandemic on the economy.
The Microfinance State Minister, Haruna Kasolo Kyeyune told Parliament that he has alerted the president on the matter and will respond soon. He also allayed the fears of the legislators, saying all is moving on well in the Central Bank.
The directive follows the expiry of Dr. Louis Kasekende’s contract on 18th January 2020. Dr. Kasekende was serving under Bank of Uganda Governor Prof. Emmanuel Tumusiime Mutebile.
The expiry of his contract completed a decade of his service in the same position and making him the longest-serving deputy governor and Deputy Chairperson of the Bank of Uganda Board.
According to the 202/2021 financial year National Budget Framework Paper, government indicates that it needs Shillings 481.7 billion to recapitalise Bank of Uganda. The proposal became a subject of contention when the Finance and Planning State Minister, David Bahati appeared before the budget committee to defend the National Budget Framework Paper.
The query is carried in her response to the National Budget Framework Paper for the coming financial year 2020/2021. The government indicated in the framework paper, that up to 482 billion Shillings will be needed to recapitalize the Central Bank next financial year.
Appearing before the Finance Committee on Wednesday chaired by Rubanda East MP Henry Musasizi, the Minister of State for Finance David Bahati was questioned about the continuous recapitalization of the Bank.
Fintech refers to the integration of technology to allow companies provide digital financial solutions that ease transactions with just a tap of a button, through the use of smartphones for mobile banking and investment services, among and others. Fintechs have enabled new business models that offer expanded services to customers and continue to generate new revenue streams for financial service providers.
The Bill seeks to amend the Constitution following a resolution by Parliament on 28th February 2019 which sought to remove the Governor and the Deputy Governor from being chairperson and Deputy Chairperson respectively of the board of directors of the Central Bank.
According to the Bank of Uganda act, the Central Bank Governor who is also the most senior officer in the bank also chairs the board of directors and deputized by the Deputy Governor. The other members are the Secretary to the Treasury and directors from different departments in the bank.