Parliament has Friday approved a sum of Shs 284bn towards the capitalization of Bank of Uganda, which is Shs 200bn less of what the Central Bank had requested.
The Bank of Uganda had made a budgetary request of Shs 484bn.
The approval by Parliament followed a report by the committee on Finance, Planning and Economic Development chaired by Rubanda East MP, Henry Musasizi on the ministerial policy statement and budget estimates for the Financial year 2019/20.
In the 2016/17 financial year, Bank of Uganda was capitalized with Shs 100bn and has since requested for Shs 484.2bn towards the same in the coming 2019/20 financial year.
“Whereas the bank needs to be capitalized from time to time, to maintain a sound capital base, the Committee found an increase from Shs 100 billion to Shs 484.21bn in a period of 2 years unjustified,” Musasizi said.
Musasizi said that in the wisdom of the committee members, there is need for gradual and consistent increments in budget allocations for capitalization of the bank.
“Capitalization is not an annual event, it is done as and when there is need but our argument is that – Yes, there is need to capitalize Bank of Uganda, but what range and in the committee’s opinion, Shs 200bn for this year is good enough to keep it stable and sound,” Musasizi said.
The Committee recommended that Shs 284bn be reallocated from Treasury Operations (BoU capitalization) to other priority sectors to meet the funding as will be identified by the House.