By Spy Uganda
Uganda’s Central Bank, also called Bank of Uganda is on the verge of going insolvent unless government recapitalises it as soon as possible.
Because of the numerous scandals BoU officials have been involved in during the past few years, the national Bank is currently choking on debts worth billions of shillings arising from lost cases and legal costs.
According to the Auditor General’s report for the year 2018/2019, BoU made losses of over Shs850Bn in 2019 alone, without considering the losses in past years.
Besides that, several senior BoU officials, both those still serving and others whose contracts ended have been cited in scandals of self-enrichment and siphoning money from the Bank, and a combination of all the above has left the Central Bank in a deep quagmire.
In order to solve this issue which puts BoU as risk of bankruptcy, Bank officials led by Governor prof.Emmanuel Tumusiime Mutebile have asked Parliament to recapitalise the Central Bank with Shs480Bn, so as to avoid a looming economic catastrophe.
However, Betty Aol Ocan, the leader of the opposition rejected this move and said Bank of Uganda’s continued recapitalization would breed financial indiscipline at the institution.
Her fears are contained in her response to the 2020/2021 National Budget Framework Paper.
Ocan said since Bank of Uganda superintends over the commercial banks, it needs to lead by example by exercising fiscal discipline.
In her response, Ocan said if the Central Bank is granted its wish, its budget will exceed that of other crucial sectors like tourism which brought in USD1.6 billion, Ministry of Gender, Labour and Social Development and the ministry of Trade and Industry.
“The bank should consider utilization of savings on government accounts, a draw down of general reserve funds and deposit auctions as well as repurchase agreements,” she said.
She also advised BoU officials to explore all other avenues before seeking any recapitalization.
However, BoU officials are yet to give an official response to LoP Ocan’s rejection of their proposal for recapitalisation and what effects it will have on the economy in case the move is rejected by Parliament.