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Parliament authorizes Govt to borrow US$90 million for secondary schools education project



Parliament authorizes Govt to borrow US million for secondary schools education project

This project is economically viable given the merits to be derived from better access to lower secondary education … as well as improvement in the educational system.

KAMPALA, Uganda, December 2, 2021 / APO Group / –

Parliament has authorized the Government to borrow 65.6 million special drawing rights valued at approximately US $ 90 million that will fund the Uganda Secondary Education Expansion Project (USSEEP).

The project’s development objective is to improve access to lower secondary education by targeting underserved populations in targeted areas, including communities hosting refugees, girls, and people with limited access to public lower secondary schools.

The loan to be granted by the International Development Association of the World Bank Group has been approved by the Chamber because it is compatible with the principle of external debt that requires that loans for the social sectors be concessional.

Upon presenting a report from the National Economy Commission in relation to the loan on Wednesday, December 1, 2021, the President of the Commission H.E. Ikojo John Bosco told the House that the loan is concessional in nature with a significant grant element.

He explained that the loan is consistent with the medium-term debt strategy for the 2020/2021 financial year, which prioritizes external financing over internal financing over concessional debt.

“This project is economically viable given the merits to be derived from better access to lower secondary education … as well as improvement in the educational system,” Ikojo said.

Speaking about the loan application, the Opposition Leader in Parliament, Hon. Mathias Mpuuga said that Uganda ranks lowest in the sub-Saharan region in financing education with a percentage of GDP of 2.4.

He urged legislators to consider these facts when approving loan applications for funds to improve the education sector in order to stay abreast of future obligations and challenges that may arise.

“In the third year of the project, the Government is supposed to offer a counter-financing equivalent to 75 billion shillings. The Minister of Education and Minister of Finance should confirm to Parliament that this money will be included in the budget framework document later this month. We have an annual report on it until its financing, ”said Mpuuga.

Kiboga East County Deputy, H.E. Keefa Kiwanuka said his main concern is the government’s readiness to implement the project because the loan has a commitment fee in which the money set aside, if not used, increases the commitment fee. He asked the government to assure Parliament that they are ready to start the project.

Finance Minister Hon. Matia Kasaija informed Parliament that from the $ 90 million loan there is a $ 60 million grant. He said that if the loan was not accepted, it would be withdrawn along with the grant.

In the Committee’s report, it was noted that in the recent past, the tax-to-GDP ratio stagnated at 12 percent, while the public debt-to-GDP ratio increased to 35.6 percent. The Committee recommended that the Government review tax exemptions and tax holidays, as well as other means to improve the mobilization of national revenue.

The Committee also recommended that the Government continue to review operations with a view to eliminating wasteful or inefficient spending, in order to reduce spending pressures.

In addition, the Committee noted that most of the school project designs are implemented without the involvement of Local Governments at the planning level, resulting in faulty designs.

The report of the National Economy Commission follows a directive from the President of Parliament made on September 1, 2021, to study the loan application and inform the Chamber of its viability.

The loan is expected to fill the gap of 116 schools and absorb the growing number of children going to school in Uganda, thus achieving the national goal of universal secondary education by 2025.

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