BoU confesses losses, seeks Shs484bn capital

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By Kagenyi Lukka

Bank of Uganda [BoU] has cried to government seeking a recapitalisation of atleast Shs484bn owing to shortfalls since 2013.

Finance ministry officials led by the Accountant General, Lawrence Ssemakula, last week told MPs who sit on the Finance Committee of Parliament that the money is needed to cover deficits and losses.

Ssemakula warned the committee of a possible financial crisis if BoU was not rescued in time.

He said BoU has been impaired from June 2013 and as per the BoU Act, government has no option but to allocate the money in its budget since their operations are in deficits.

The bank has not yet accounted for all the Shs478bn it injected in Crane Bank Limited before its collapse.

According to the ministerial statement for the 2018/2019 Financial Year (FY), Shs484.2bn capitalisation fund for BoU is expected to increase the budgetary allocation towards payment of domestic debt from Shs2.3 trillion in 2018/19 FY to Shs3.2 trillion in 2019/20 FY.

Finance ministry Permanent Secretary Keith Muhakanizi previously wrote to the Clerk of Parliament, explaining that BoU had registered a deficit of Shs17bn.

He referred to operating losses of about Shs457bn on account of “monetary policy” and “currency costs”.

“This projected deficit in the core capital position, together with the required core capital position of UGX30b, puts the additional recapitalisation securities to the tune of UGX504b,” Muhakanizi wrote.

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