{UAH} Pojim/WBK: MPs block Shs700b loan to stabilise falling Shilling - National

http://www.monitor.co.ug/News/National/MPs-block-loan-stabilise-falling-Shilling/-/688334/3026038/-/syl3ac/-/index.html

MPs block Shs700b loan to stabilise falling Shilling

Ms Alice Alaso (Serere MP) said the presentation of the disputed loan request is an indication that Bank of Uganda's fiscal policy options have failed to stabilise the economy to the extent that the country has now resorted to "war-time measures" of borrowing to stabilise the weakening shilling 

Parliament. Parliament on Thursday rejected a new government request to borrow $200m (about Shs686.1b) to stabilise the exchange rate. 
The MPs instead advised ministry of finance to "think of other serious ways" of rescuing the economy from the shocks. 
Ms Alice Alaso (Serere MP) said the presentation of the disputed loan request is an indication that Bank of Uganda's fiscal policy options have failed to stabilise the economy to the extent that the country has now resorted to "war-time measures" of borrowing to stabilise the weakening shilling.

Mr Felix Okot Ogong (Dokolo County MP), wondered how an economy that has been praised as "buoyant and capable of withstanding domestic and foreign shocks" can resort to borrowing in order to stabilise the falling exchange rate. "I don't understand the economics being used here. Even Idi Amin who used to travel with foreign currency never borrowed to stabilise the economy and I am sure even the President is not aware about this loan request," Mr Ogong said.

Junior Finance minister Aston Kajara attempted to save the government request to borrow from the Eastern and South African Trade and Development Bank but without success. The MPs from across all political sides accused him of indulging in "lamentations" instead of fixing the economy. Upon insisting on the request, Speaker Rebecca Kadaga told minister Kajara she was not sure whether he was not flogging a dead horse.

"I wish to agree that we withdraw the bill for further consultation and bring it back at an appropriate time," Mr Kajara responded. The minister had earlier told MPs: "The root cause of the problem is reduced exports and increased imports. We also have speculation in the domestic market and our tourism earnings have declined. The solution is increased production but it cannot be in the shortest time possible. We need short-term measures to save the situation."

Mr William Nzoghu (Busongora County North MP) presented a minority report signed by two MPs and requested the House to throw out the government loan request. Mr Nsoghu reasoned that it would be wrong for government to borrow an expensive loan to stabilise the exchange rate, which is determined by market forces.

The lawmakers across the political spectrum supported Mr Nzoghu before one of the NRM MPs moved a motion forcing the minister to withdraw the motion. None of the members from either side supported the government motion.
The chairperson of the Committee on National Economy, who had presented the main report said he had been ambushed by the minority report but Ms Kadaga said, since Wednesday, she had had both reports and asked MPs to proceed with the debate on the two documents.

The Budget Committee chairperson, Mr Amos Lugoloobi (NRM), said he was puzzled by the government intervention in fixing the exchange rate. He wondered whether it is sustainable to fix the exchange rate using borrowed money without prescribing the solutions to the causes. 
"This is not the right way to proceed. What we need to fix are the weaknesses on the supply side. We are importing more than what we export- this is the problem," Mr Lugoloobi observed.
Mr Theodore Ssekikubo (Lwemiyaga MP) also rose to support both reports but immediately pointed out "the ills and dangers" of the loan the government was seeking.

"We cannot borrow for consumption, this is unsustainable. This Parliament has been on record, the problem is elsewhere, multinational companies are repatriating our foreign exchange without raising a finger. This is being cosmetic," Mr Ssekikubo charged. 
Mr Jacob Oboth Oboth (West Budama South) reiterated his colleagues' position to oppose the Cabinet's loan request.

Ms Betty Among (Woman MP, Apac District) said: "We are all shocked by the conclusion in the main report that we approve the loan when the body of the committee report says this loan is not sustainable." 
Mr Abdul Katuntu (Bugweri County MP) said: "A loan itself is an indirect import. The government is actually worsening the situation. There is no way you can treat this by artificially borrowing. This is what we call artificial control, it's just a pain killer. There is only one solution, increase production to boost exports."

Mr Katuntu and other MPs proposed that instead of government borrowing to stabilise the shilling, they should borrow to inject more money in the tourism sector. 
Meanwhile, Parliament on Thursday suspended fees charged by Kampala Capital City Authority on campaign posters in the city. Candidates at all levels were paying Shs500 per pinned poster but lawmakers, especially those from Kampala told the House that the fees were illegal and impede their rights to freely participate in the electoral process.

Acting Leader of Government Business Tarsis Kabwegyere tried to defend the KCCA decision in vain. After Parliament's resolution, Speaker Kadaga ordered that the fees be suspended until government returns to the House with the relevant laws they are using to charge candidates to hang campaign posters.

editorial@ug.nationmedia.com

MPs block Shs700b loan to stabilise falling Shilling - National

http://www.monitor.co.ug/News/National/MPs-block-loan-stabilise-falling-Shilling/-/688334/3026038/-/syl3ac/-/index.html

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