By Spy Uganda
Economic experts are worried that Uganda’s economy might soon sink into a severe quagmire after State Minister for Finance and economic monitoring Hon.David Bahati told parliament on Wednesday that the Bank of Uganda has registered losses of over Shs2 Trillion for the past 13 years, but the government can’t do anything about it.
In a response to a question raised by MP Kenneth Lubogo (NRM, Bulamogi), Bahati said the Bank of Uganda posted only Shs40 billion in profits in 15 years, which was remitted to the Consolidated Fund Account as required by the Bank of Uganda Act.
Thereafter MP Lubogo sought to know the “profits or losses BoU has made annually for the last 15 years. He asked Bahati that “When was the last time BoU made profits?”
Bahati replied that “The Shs40 billion profits were registered in 2007, and since then, the Central Bank has been making losses.”
Richard Othieno, (NRM MP, West Budama North), who was holding forte for MP Lubogo, asked a supplementary question.
“Bank of Uganda trades in securities; the minister is talking of making losses; can the minister brief the country the circumstances under which the Bank made the losses yet it trades in securities,” said Othieno.
Minister Bahati, however, replied that the Bank made losses and nothing can be done about it.
He said that “The bank truly trades in securities but it invests in monetary policies that involve making losses; these are the facts on the ground; we cannot do anything about it because a loss is a loss,” said Bahati.
It should be noted that Central banks worldwide invest in securities hoping to make profits to offset national revenue needs by beefing up the Consolidated Fund Account, but unpredictability and volatility of the securities market puts central banks at risk of always making losses.
The Central Bank of Kenya, for example, toyed with the Eurobond securities, which ended up badly, before sparking off a national scandal that landed several top politicians in hot soup.
Bank of Uganda’s securities misadventures are undocumented, and the Rules of Procedure governing questions for oral answers restricts further inquiries, making it difficult for MPs to interrogate the matter further.
It should also be noted that early this year, Bahati also told parliament that BoU registered a loss of Shs200Bn in the Financial Year 2018/2019. However, it is not clear whether this was part of the Shs2 Trillion loss or a separate new multibillion loss.