Parliament approves loan request for Shs 1.7 trillion Loan to come from Standard Chartered Bank

Members of Parliament approved a government request to borrow $464 million (about 1.7 trillion shillings) to finance the budget’s infrastructure and development needs despite opposition from the opposition, who say the loan terms are unfair.

Returned to Parliament National Economy Commission Tuesday, the loan must come from Standard Chartered Bankwho will act as “lead arranger and agent” for Japan Export and Investment Insurance (NEXI), a Japanese insurance company, and the Islamic Corporation for Insurance of Investments and Export Credits (ICIEC), which will actually provide the money.

Chairman of the Committee, the Hon. John Bosco Ikojo and the Hon. Hassan Kirumira (NUP, Katikamu South) who presented the majority and minority reports respectively, were both uncomfortable with a clause that required Uganda to waive its sovereign immunity for domestic and foreign assets, implying that lenders can opt for domestic assets in the event of default.

“The committee recommends that the Ministry of Finance renegotiate provisions for the waiver of sovereign immunity to avoid exposing critical government assets to creditors in the event of default,” Ikojo said.

Kirumira also instructed the Attorney General to do the same. “The Attorney General must renegotiate the terms of Uganda so that we do not sacrifice the sovereignty of the country and the main national assets in the hands of the lender; the terms are unfavorable in their current state for a county like Uganda,” he said.

The Shadow Finance Minister, the Hon. mohamed kivumbi questioned the payment of interest on the portion of the loan provided by ICIEC, which according to Islamic traditions does not accept interest on loans.

Minister of State for Finance, the Hon. Henri Musasizihowever, dismissed the fears and said the government will ensure that final terms are negotiated in a way that protects Uganda’s assets.

On the interest payment for the ICIEC portion of the loan, Hon Musasizi says that “the government of Uganda is dealing with Standard Chartered Bank as lead arranger; all loans will come from Standard Chartered Bank (SCB) and in fact the debt service payment will be to SCB because ICIEC has not made a specific request to the Ministry of Finance”.

He also answered the question about waiving sovereign immunity. “The Attorney General will negotiate and conclude; what we are looking at are the funding conditions and all have been presented to Parliament“, said Musasizi.

Hon. James Kaberuka (NRM, Kinkizi West) said that since the Attorney General will renegotiate the terms affecting sovereignty, the loan should be approved.

“Dear MPs, you are the ones who are going to raise issues of national importance about the state of roads and infrastructure in your area, how do you expect the government to fund these projects?” he said.

Defend the loan request before Parliament National Economy Commission yesterday, Musasizi said critical projects must be completed and second quarter releases must be backed by cash flow, saying the loan offers the best terms compared to other available options.

Distributed by APO Group behalf Parliament of the Republic of Uganda.

© African Press Organization, source Press Releases

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