Government signed new loans worth $628.79m (Shs2.2 trillion) in the first half of the 2021/22 fiscal year, a Ministry of Finance report shows.
The loans from different creditors seek to support government fulfil planned budget programmes, among which include public sector transformation, climate change and water management and human capital development.
A report by the Ministry of Finance, which highlights management of public debt, guarantees, financial liabilities and grants, indicates that government as of December 2021, sang new loans with African Export-Import Bank (Afrexim), International Fund for Agricultural Development (IFAD) ), Italy and Spain, among others.
Afrexim constituted the biggest portion of the signed loans, accounting for 64 percent followed by (IFAD), which contributed 16 percent. Loans from Spain and Italy constituted 5 percent and 2 percent, respectively.
During the period government signed two loans amounting to $402.32 (Shs1.4 trillion) from Afrexim to fund public sector transformation while $103m (Shs 366.6b) was signed in July from IFAD to support agro-industrialization and development of the National Oil Seeds Project .
Other loans included $80.98 (Shs288.2b) from AFD to support natural resources, environment, climate change, land and water management, $11.72m (Shs41.7b) from Italy to support human capital development and Karamoja Infrastructure Development Project and two traches from Spain of $19.97m (Shs71b) and $10.8m (Shs38.4b) for the refurbishment of the Kampala-Malaba Meter Gauge Railway.
During the period, the Ministry of Finance indicated that loan financing decreased by 21 percent because government is being cautious on debt position not to exceed the recommended debt to gross domestic product ratio threshold of 50 percent.
The report also indicates that as of February 28, Parliament had approved a $90m (Shs320.4b) in December from the World Bank to the support secondary education expansion project, which seeks to enhance access to lower secondary education by focusing on underserved populations in targeted areas.
The Ministry of Finance also reported that a number of loans have been negotiated while others are awaiting Cabinet approval.
Among those still under negotiation include two loans of $340m Shs1.2 trillion and $150m (Shs534b) from World Bank to support the energy access scale up project and mineral development investment in industrial transformation and employment project accountability, respectively.
Another €417m (Shs1.8 trillion) from Standard Chartered for budget support is also still under negotiation.
Those awaiting Cabinet approval include a $16.2m (Shs57.6b) loan from the Saudi Arabia Fund for Construction and Equipping of Technical Institute to support vocational education and training and €40m (Shs178b) from KfW to upgrade and improve electricity transmission lines in Mbale- Bulambuli.
Another $140m (Shs498.4b) loan from the World Bank to support the digital acceleration project – Govnet ICT is also awaiting Cabinet approval.