Overview:
Although the Treasury Operations claims that the request for recapitalization was made by the Bank of Uganda, it should be recalled that in January 2021, a similar claim was made by the Ministry of Finance, only for the Deputy Governor, Bank of Uganda, Michael Atingi-Ego, to distance himself from the request denying that Bank of Uganda hadn’t sought for Shs481Bn to recapitalize the Central Bank, describing the request as impractical.
KAMPALA: The Ministry of Finance has appealed to Parliament’s Finance Committee to approve Shs217.330bn for the recapitalization of Bank of Uganda in 2023/2024 national budget.
However, no single penny has been availed for this item, with Jennifer Muhuruzi, Acting Director Treasury Services and Asset Management at Ministry of Finance, calling on MPs to support the latest endeavor to recapitalize the Central Bank to ensure its smooth operations in the 2023/2024 Financial year.
Muhuruzi said that Government wants another Shs1.2Trn to pay up the money it borrowed from the Central Bank to finance the national budget.
“We do have Bank of Uganda reimbursements and this is Shs1.2Trn, last Financial year, we weren’t able to clear all the reimbursements and we had to carry this forward. We had talked about capitalizing Bank of Uganda so we have made a provision of Shs217Bn as per Bank of Uganda Act and our responsibilities to our agents who are the Central Bank. So Shs217Bn has been put in the budget but it hasn’t been provided for in the estimates.”
However, Muwanga Kivumbi (Butambala County) wondered why Government should shoulder the burden of recapitalizing the Central Bank yet the entity charges Government highly for the money it borrows.
“You want us to capitalise Bank of Uganda to the tune of Shs217Bn and at the same time, this Bank of Uganda charges exorbitantly. I want to be convinced, which one is which? We are capitalizing you, you are charging highly, so this animal called Bank of Uganda and this capitalization has been everywhere almost every financial year except last financial year,” Muwanga said.
Although the Treasury Operations claims that the request for recapitalization was made by the Bank of Uganda, it should be recalled that in January 2021, a similar claim was made by the Ministry of Finance, only for the Deputy Governor, Bank of Uganda, Michael Atingi-Ego, to distance himself from the request denying that Bank of Uganda hadn’t sought for Shs481Bn to recapitalize the Central Bank, describing the request as impractical.
Atingi-Ego said that the Central Bank couldn’t have requested for Shs481Bn as purported by the Ministry of Finance in the 2021/2022 National Budget Framework Paper because the Bank’s books for the same financial year haven’t been audited to establish the capital position of the Central Bank to warrant its recapitalization.
The denial angered MPs who accused the Ministry of Finance of using the perennial recapitalization requests to Bank of Uganda, to siphon funds, by hiding behind the Central Bank.