The committee of National Economy of Parliament has approved a Ugx 245 billion Uganda Development Bank Loan, a report filed to parliament on Wednesday afternoon reveals.
According to the report, the committee considered that the Uganda Development Bank takes loans, Euros 15 million from the European Investment Bank, USD 10 million from the International Islamic Trade Finance Corporation, USD 20 million from the OPEC Fund for International Development and USD 20 million from the Arabic bank for Economic Development in Africa.
The request, presented before Parliament by the Ministry of Finance Planning and Economic Development in June 2020 seeks to further streamline the Uganda Development bank strategic plan 2020 2024 in further improving Uganda’s low and middle income earners.
The committee indicated that since the Development Financial Institutions are important instruments of Government through which social economic development is promoted, the loans would profitably promote and finance viable economic development within the country since it also supports the private sector.
The bank according to a 2019 report financed projects in the Health, Education, Agriculture, Infrastructure, tourism and Hospitality, among other sectors to further development.
The MPs, led by the committee chairperson Syda Bumba, indicated that the loans, if Guaranteed by government will move along in financing projects of Private enterprises in Uganda, import and pre export financing of acceptable goods, favoring the commercially oriented public sector among other issues.
“These lines of credit will not directly impact government debt. It can only happen if Uganda Development Bank Limited fails to pay the loans to the creditors, and it is until then that these facilities will become a direct government liability,” the committee noted.
However, the committee recommended that in order for Uganda Development Bank to enhance its capacity of providing development financial solutions as enshrined in its mandate, the bank should seek out an appropriate mix of funding that will generate its requisite capital to finance its investment needs at affordable costs.
The bank currently has undertaken more than six loan obligations with international financial institutions.
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