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Committee Recommends Audit of UGX 93B Govt Guarantees

A leaked report by parliaments National Economy Committee has recommended for a value-for-money audit in all enterprises that benefited from government guarantees worth 93.6 billion Uganda Shillings.
The National Economy Committee Chairperson Syda Bbumba.
A leaked report by parliament's National Economy Committee has recommended for a value-for-money audit in all enterprises that benefited from government guarantees worth 93.6 billion Uganda Shillings.

The committee's report dated January 2018 is on the Country's state of indebtedness, grants and guarantees.

During the financial year 2016/2017, two guarantees worth 57.6 billion Shillings and 36 billion Shillings from the Arab Bank for Economic Development in Africa (BADEA) International Development Association (IDA) respectively, were approved to recapitalise Uganda Development Bank (UDB) in order to avail affordable private sector credit.

In February 2016, government approved a request by UDB to increase the institution's financial capital from 100 billion to 500 billion Shillings to allow the bank to offer loans for major infrastructural developments in key growth sectors of manufacturing, agriculture, extractive industries and tourism among others.

The sectors were deemed to have a multiplier effect for both wealth and job creations.

According to the National Economy committee report that is yet to be tabled on the floor of parliament, the two UDB guarantees worth 93.6 billion Shillings increased the value of contingent liabilities from 139.9 million US Dollars to 165.9 million US Dollars by March 2017.

The report, a copy of which URN has seen, says that contingent liabilities oblige government in future to make unexpected payments leading to fiscal risk exposure and put public debt on an unsustainable path.

“The committee recommends that government undertakes a value-for-money audit in all enterprises that have benefited from government guarantees,” reads part report by the national economy committee chaired by Nakaseke North MP Syda Bbumba.

The committee says that the guarantees for which government holds contingent liability remain a risk in the event of default, hence a need for a value-for-money audit in all enterprises that benefited from government guarantees worth 93.6 billion Shillings.

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