The State Minister for Finance, Hon. Henry Musasizi, has informed that the government is in discussions with the World Bank regarding its decision to reduce funding for projects in Uganda.
Musasizi stated that negotiations are ongoing with the World Bank. Should an agreement not be reached, alternative budgetary decisions will be formulated and submitted to Parliament for approval.
These remarks were made during a meeting with the Committee on Finance, Planning, and Economic Development on Thursday, August 10, 2023.
This response followed a query by Committee Chairperson, Hon. Amos Kankunda, who sought information on how the government intends to manage the repercussions resulting from the World Bank’s funding reduction.
On Wednesday, August 9, 2023, the World Bank released a statement announcing the withdrawal of financial support due to the passage of the Anti-Homosexuality Act, 2023.
The World Bank clarified that a team had been dispatched to Uganda to evaluate additional steps necessary for ensuring project alignment with the institution’s environmental and social standards.
The World Bank statement reads, “Approval for new public financing in Uganda will be withheld until the effectiveness of these supplementary measures has been validated.”
Musasizi emphasized that several projects earmarked for the upcoming Financial Year 2023/2024, including those in the Greater Kampala Metropolitan area, will be impacted.
He emphasized that the World Bank’s actions will carry significant consequences for government operations.
“We are currently in the process of devising strategies to adjust the budget, but such adjustments will necessitate your endorsement,” stated Musasizi.
In a separate development, Members of Parliament expressed concerns about the country’s domestic debt and the government’s inability to promptly compensate the private sector.
Deputy Committee Chairperson, Hon. Jane Pacuto, highlighted that domestic arrears currently surpass shs7 trillion, asserting that this situation severely affects key players in the sector.
Pacuto contended that timely private sector payments are crucial for fostering economic growth and broadening the tax base.
Hon. Muwanga Kivumbi (NUP, Butambala County) urged the Finance Ministry to furnish Bank of Uganda with recent records of outstanding reimbursements.
He also requested the ministry to provide a breakdown of primary debt commitments for domestic suppliers across all Ministries, Departments, and Agencies.
Kivumbi stressed, “Withholding around shs8 trillion meant for services rendered to the government impedes economic progress. We need this data to come to a logical resolution.”
Hon. Karim Masaba (Indep., Industrial Division, Mbale City) tasked the ministry with sharing Uganda Revenue Authority’s revenue collection figures with the committee.
Musasizi attributed the domestic debt burden to delayed disbursements, explaining, “Our inability to compensate the private sector isn’t a deliberate choice, but rather a consequence of limited funds.”
He added that comprehensive statistics on government’s domestic debt obligations will be furnished following an audit slated for completion in December of this year.