A leaked report by parliament’s National Economy Committee has recommended for a value-for-money audit in all enterprises that benefited from government guarantees worth Shs 93.6 billion.
During the financial year 2016/2017, two guarantees worth Shs 57.6 billion and Shs 36 billion from the Arab Bank for Economic Development in Africa (BADEA) International Development Association (IDA) respectively, were approved to recapitalise Uganda Development Bank (UDB) in order to avail affordable private sector credit.
In February 2016, government approved a request by UDB to increase the institution’s financial capital from Shs 100 billion to Shs 500 billion to allow the bank to offer loans for major infrastructural developments in key growth sectors of manufacturing, agriculture, extractive industries and tourism among others.
The sectors were deemed to have a multiplier effect for both wealth and job creations.
According to the National Economy committee report that is yet to be tabled on the floor of parliament, the two UDB guarantees worth Shs 93.6 billion increased the value of contingent liabilities from $139.9 million to $165.9 million by March 2017.
The report notes that contingent liabilities oblige government in future to make unexpected payments leading to fiscal risk exposure and put public debt on an unsustainable path.
“The committee recommends that government undertakes a value-for-money audit in all enterprises that have benefited from government guarantees,” reads part report by the national economy committee chaired by Nakaseke North MP Syda Bbumba.
The committee says that the guarantees for which government holds contingent liability remain a risk in the event of default, hence a need for a value-for-money audit in all enterprises that benefited from government guarantees worth Shs 93.6 billion.