The Government has backtracked on its earlier request to Parliament
to borrow 1.29 trillion Shillings for the refurbishment of the Kampala-Malaba Meter
Gauge Railway Project and presented a fresh loan request of 1.393 trillion
The new loan request is in the excess of 101.05 Billion Shillings of the government’s
The Kampala-Malaba railway connects Uganda’s capital with Kenya at
the Malaba border.
David Bahati, the State Minister of Finance for Planning Wednesday moved the
motion to withdraw the government’s earlier request.
The money for the project will be sourced from the African Development Fund-
ADF which will provide 356.61 billion shillings, the African Development Bank- ADB (825.52 billion) and
the Corporate Internationalization Fund of Spain (110.72 billion shillings).
Speaker Rebecca Kadaga tasked the Committee on National Economy to
scrutinize the request and report back to the House.
However, Bahati asked permission to withdraw the request and presented a fresh
one with more funds required to finance the project.
He said that during the consideration of the initial loan request, the bank
informed the ministry that it can provide more money in a concessional window
than a non-concessional window.
Concessional loans also referred to as soft loans have more generous terms than
non-concessional loans. They generally have a low-interest rate and have long
“I note that the changes in the loan amount amounts and terms require a formal
withdraw of the loan request and submission of a new loan request to
parliament. So, Madam Speaker, I am withdrawing this but formally laying the
new terms so that the Committee of National Economy can conclude this request
by the government,” Bahati said.
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Geoffrey Macho, the Busia Municipality MP raised concern saying that the
government is moving to refurbish the old railways yet others are moving
towards Standard Gauge Railway.
“What is wrong with Uganda, who has cursed us?” he asked.
Kadaga told the government to
withdraw the initial loan which MPs approved and sent the new loan request to
the National Economy Committee for consideration.
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The country’s national debt recently hit 65.82 trillion shillings as of December 2020, a
figure way above the 49 trillion debt reported in 2019.
The new loan requests by the government imply that Uganda’s debt portfolio will
swell in the coming financial year 2021/2022 and that the country is moving
closer to its threshold set by the International Monetary Fund at 50 percent
debt-to-GDP ratio for developing countries.
The country’s nominal debt to Gross Domestic Product -GDP as of December 2020
stood at 47.2 percent and the public debt is projected to rise to 51.9 percent
of the GDP in the coming financial year 2021/2022.
In his recent interface with Parliament’s Budget Committee, Finance Minister
Matia Kasaija said that the debt burden had increased because the government
borrowed to finance infrastructural projects such as transport, oil and gas
sectors and to also counter the shock to the economy occasioned by the Covid-19