Members of Parliament on the budget committee have quizzed officials from the Central Bank for allegedly attempting to seize powers of Parliament when they extended a loan of Shs3 trillion to government without seeking parliament’s approval.
Appearing before the committee, Bank of Uganda Deputy Governor, Michael Atingi-Ego, said the Shs3 trillion funding was extended to government through liabilities of matured securities that the Central Bank paid on behalf of the government, but despite the promise to have the money paid in two years, no penny has been paid.
However, the Deputy Governor, defended the decision to pay the securities on behalf of the Ministry of Finance revealing that the Central Bank and the Ministry have a memorandum of understanding where the bank is required to redeem maturing domestic security obligations, after which government must pay the Central Bank but in 2020/2021, the Ministry found difficulty in honoring its obligations due to the effects of the COVID-19 pandemic.
Tororo North MP, Geoffrey Ekanya, described the arrangement as indirect borrowing, wondering why the Central Bank didn’t seek Parliamentary approval to engage in such an arrangement with the Ministry of Finance.
