Officials from the International Monetary Fund (IMF) have described the recently authorized US Dollars 1 billion extended credit facility for Uganda, which will aid the country’s rehabilitation following the Covid-19 disaster.
The explanation was given during a meeting between the Leader of the Opposition in Parliament, Mathias Mpuuga, and IMF country representative Izabela Karpowicz, as well as the agency’s Chief of Mission, Amine Mati, on Monday afternoon.
The discussion was convened under the auspices of the Parliamentary Forum on the IMF and the World Bank, with the goal of briefing the Opposition leadership in parliament on government plans backed by the IMF and the World Bank.
The IMF Executive Board approved a loan in June under the Extended Credit Facility (ECF) arrangement to help Uganda recover from COVID-19 and enhance household incomes and inclusive growth by supporting private sector development.
Mati took time to explain the US Dollars 1 billion loan facility for Uganda that was approved by the IMF executive board in June under the Extended Credit Facility (ECF) arrangement to support the post-COVID-19 recovery and the plan to increase household incomes and inclusive growth by fostering private sector development. Mati addressed the meeting via zoom from Washington DC.
According to Mati, Uganda was chosen for the three-year financing package after the COVID-19 crisis hit the country hard, reversing decade-long accomplishments in poverty reduction, deteriorating fiscal balances, and putting strain on external buffers.
Mpuuga told IMF officials that questions regarding the loan have stayed in the public sphere because the administration has been tight-lipped about the loan’s purpose. The Leader of the Opposition also questioned how the IMF loan was granted without prior consent from Parliament.
“We are surprised that the IMF did not consider obtaining Parliamentary clearance for the loan; some of these requirements that are subject to the laws of the land should be respected since supervision begins with adherence to the established procedure,” Mpuuga added.
Mati, on the other hand, explained that because the IMF works directly with the government and the central bank, they assumed that the laws had been followed by the time the loan was sought for.
The IMF team was tasked by Budadiri West MP Nathan Nandala Mafabi, who is also a board member of the Parliamentary Forum on the IMF and the World Bank, to explain whether they took Uganda’s absorption capacity into account following various Auditor General reports that revealed many unutilized loans.
The Auditor General, John Muwanga, stated earlier this year that 12 loans totaling 1.3 trillion Shillings had expired before being disbursed to their respective ministries and government bodies. This jeopardized the achievement of specified development goals and rendered commitment charges paid on monies that had not yet been disbursed useless.
The MPs also questioned how the IMF arrived at the loan amount and whether it was concerned about Uganda’s large national debt.
While Uganda’s public debt is large, Karpowicz of the International Monetary Fund (IMF) said it is not a reason for alarm because its Gross Domestic Product (GDP) is higher than that of many other countries.
This is why the Extended Credit Facility (ECC) scheme prioritizes domestic revenue,” she explained. The group decided to engage legislators further in order to gain a better understanding of how the loan facility was constructed and to identify serious flaws.