A proposal to borrow Shs852 billion to rehabilitate the Kampala- Malaba meter guage railway has been sent to the Committees of Physical Infrastructure and National Economy.
The new loan offer from the African Development Bank working in concert with the Corporate Internationalisation Fund of Spain comes with a Shs221 billion grant.
In 2021, Parliament approved a running loan amounting to £327 million for the same purpose but a letter from the African Development Bank (ADB) informed the government that under the same terms, a new facility worth Shs852 billion is available.
With the new offer, Cabinet, in a letter to Speaker Anita Among written by Acting Minister of Finance, Planning and Economic Development, Hon. Henry Musasizi, states that, the old running loan is to be stopped since the terms are similar, and the new one adopted.
“In light of the above, this ministry proceeded to Cabinet to rescind the earlier approval and authorize the Minister of Finance, Planning and Economic Development to seek the authorisation of Parliament to approve the amended proposal and consider making changes to the Resolution of Parliament dated 11 May 2022,” said Musasizi, in a letter to Speaker Among.
The new offer from ADB comes after the bank upped Uganda’s debt sustainability status from low risk to “moderate risk of debt distress”, according to Mr Augustine Ngafuan, who made the new offer to Uganda on behalf of the continental lender.
The Attorney General, Hon. Kiryowa Kiwanuka okayed the new arrangement but hinged his approval of the loan on the Ministry of Finance obtaining new authorization from Parliament.
After hitting a deadlock with financiers over the proposed construction of the Standard Gauge Railway due to unfriendly terms and exorbitant interest rates, government chose to, in the interim, resuscitate the old railway and also utilize Lake Victoria as a viable alternative corridor for bulk transportation, especially of petroleum products and imports.
In a first, Speaker Among said there is need to have the request scrutinized by two committees to harmonise positions and ease the work of the whole House.
She asked the committees to expeditiously process the request.