Gov’t to borrow UGX 1.7 Trillion to mitigate effects of COVID -19

Kampala, Uganda | THE INDEPENDENT | The Finance Ministry has tabled a proposal to borrow 1.7 trillion shillings , (449.8) million dollars to mitigate the effect of the coronavirus (COVID -19) pandemic which has slowed down the economy.

The proposal was presented today during plenary by the Minister of Finance in Charge of Planning, David Bahati.

Government will borrow 757 Billion Uganda shillings for this financial year ending and next financial year from the International Development Association (IDA) of the World Bank Group to provide sufficient financial resources to the health sector and mitigate negative effects on the economy due to COVID-19.

The government also seeks to borrow 948 Billion shillings from the International Monetary Fund (IMF) for balance of payments support to the Bank of Uganda (BoU). This is to ensure that international reserve buffers remain strong and that the exchange rate remains stable.

Rebecca Kadaga, the Speaker of Parliament forwarded the two proposals to the Parliamentary committee on budget to scrutinize it urgently.

Recently when presenting the likely economic impact of the coronavirus, the Finance Minister Matia Kasaija told MPs that Uganda faces a revenue shortfall of 270 Billion shillings due to the lock down.

“To deal with this economic shock, both fiscal and monetary policy adjustments would be required. The fiscal policies will play a critical role in mitigating the negative impact of the pandemic on economic activity and the challenges in the affected sectors particularly health, while monetary policies will help to reduce the impact of the deterioration of the Balance of Payments.” said Kasaija.

He also said that 80,000 Ugandans are mostly likely to be pushed into poverty due to the low activity in the service and industry areas, and this will lead to a decline in economic growth.

The economic growth for the country for financial year 2019/2020 has been revised downwards from 6.0% to 5.2% or 5.7% depending on the severity of the impact of the virus in Uganda.

******

URN