President Museveni has approved a request by Finance Minister Matia Kasaija, seeking to borrow to $500m (about Shs1.3 Trillion) to capitalise Bank of Uganda (BoU) and the Uganda Development Bank (UDB).
In a May 6 letter to Mr Kasaija, the President
In the letter dated May 6, the President said $500M (Shs1.316 Trillion) will be used the Central Bank as Balance of Payment Support, whereas $150M (564 Billion) is for the capitalisation of UDB.
The two loans if approved by Parliament will be secured from the International Monitory Fund (IMF). The interest rate and the repayment plan were not indicated in the President’s letter, a copy of which this newspaper has seen.
Mr Museveni said that the loan going to BoU will be used to back up its foreign exchange position and also build the capacity of the private manufacturers to produce supplies in the fight against Covid-19.
Uganda by yesterday has over 120 confirmed cases of Covid-19 and the government has put emphasis on locally manufactured medical supplies.
“I have received your letter of the April 29,regarding the $500 from the IMF to back up the Bank of Uganda foreign exchange position but also to build the capacity of the country through helping the private sector to manufacture what we need for the epidemic” the President’s letter reads in part.
Mr Museveni listed the supplies to be manufactured using the money that will be extended to the private sector through UDB as; medicines, diagnostics, Personal Protective Equipment (PPE), vaccines and processed foods among others.
While approving the loan request, the President explained the need for balance of payment expenditure by BoU.
“Balance of Payments support does not only mean helping the country to ‘import more’ but must also mean helping to ‘import less’ by manufacturing those products here” the President wrote.