The Budget Committee of Parliament has summoned Central Bank governor Prof. Emmanuel Tumusiime Mutebile to defend Bank of Uganda persistent requests for recapitalization.
Prof Mutebile is set to appear before the budget committee of Parliament to explain why the Central Bank has been pushing for recapitalization for the past three financial years.
The Central Bank in its 2020/2021 framework paper submitted to Parliament, it needs UGX 481.7 billion as a bailout after it made losses to a tune of UGX 855 billion up from the UGX424 billion in profits it recorded in 2018.
The proposal became a subject of contention when the Finance and Planning State Minister, David Bahati appeared before the budget committee to defend the National Budget Framework Paper who tasked him to explain why Parliament needed to approve the proposal for BOU recapitalization.
The committee’s reservation for recapitalizing BOU is shared by the Leader of Opposition in Parliament, Betty Aol Ocan who in her alternative Budget Framework Paper says that the continuous need to recapitalize BOU could be a sign of financial indiscipline.
She is concerned that BOU has been seeking bailouts annually yet it should perform better than the banks it supervises as a lead agency of monetary and fiscal discipline.
In 2017/2018, Parliament approved UGX.210 billion to recapitalize BOU and UGX. 200 billion in the 2019/2020 financial year.
The Bank of Uganda Act 2000 states that the authorized capital of the Bank of Uganda may be increased by a resolution of parliament to ensure adequate operations of the bank.
However, the Accountant General, Lawrence Ssemakula told Parliament last year that BOU has suffered deficits since June 2013 and thereby needs money urgently to avert an impending crisis.