The ministry of Finance has tabled a proposal to borrow Shs 1.7 trillion (about $449.8 million) to mitigate the effect of the coronavirus (COVID-19) pandemic which has slowed down the economy.
The proposal was presented by the minister of Finance in charge of planning, David Bahati. Government wants to borrow Shs 757 billion for this financial year ending and next financial year from the International Development Association (IDA) of the World Bank Group to provide sufficient financial resources to the health sector and mitigate negative effects on the economy due to COVID-19.
The government also seeks to borrow Shs 948 billion from the International Monetary Fund (IMF) for the balance of payments support to the Bank of Uganda (BoU). This is to ensure that international reserve buffers remain strong and that the exchange rate remains stable.
Rebecca Kadaga, the speaker of parliament forwarded the two proposals to the parliamentary committee on budget to scrutinize them urgently.
When presenting the likely economic impact of the coronavirus recently, the Finance minister Matia Kasaija told MPs that Uganda faces a revenue shortfall of Shs 270 billion due to the lockdown.
"To deal with this economic shock, both fiscal and monetary policy adjustments would be required. The fiscal policies will play a critical role in mitigating the negative impact of the pandemic on economic activity and the challenges in the affected sectors particularly health, while monetary policies will help to reduce the impact of the deterioration of the balance of payments," said Kasaija.
He also said that 80,000 Ugandans are mostly likely to be pushed into poverty due to the low activity in the service and industry areas, and this will lead to a decline in economic growth.
However, in an address later on Friday, President Yoweri Museveni said the country's economy will not suffer because now Uganda will scale up her manufacturing and stop importing goods that it has previously been importing.
Museveni said sectors such as tourism may suffer but agriculture will not suffer because during and after the pandemic, people within and outside the country will still need food and Ugandans can take advantage.
The economic growth for the country for the financial year 2019/2020 has been revised downwards from 6.0 per cent to 5.2 per cent or 5.7 per cent depending on the severity of the impact of the virus in Uganda.