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Uganda government seeks UGX 852billion loan for Kampala-Malaba Railway refurbishment project

The Uganda Standard Gauge Railway is a planned railway system linking the country to the neighboring countries of Kenya, Rwanda, Democratic Republic of the Congo and South Sudan, as part of East African Railway Master Plan

The Uganda Standard Gauge Railway is a planned railway system linking the country to the neighboring countries of Kenya, Rwanda, the Democratic Republic of the Congo, and South Sudan, as part of the East African Railway Master Plan (PHOTO/Courtesy)

KAMPALA, UGANDA – The National Economy and the Physical Infrastructure Committees of Parliament have been tasked to scrutinize Government’s proposal to borrow UGX 852 billion loan to rehabilitate the Kampala-Malaba Meter Gauge Railway.

Parliament had approved a running loan of £327 million in 2021 for the same purpose. However, a letter from the African Development Bank (ADB) informed the government that a new facility worth 852 billion is available under the same terms and conditions.

It’s on the basis of this guidance that the Ministry of Finance, Planning, and Economic Development has presented a proposal to seek Parliament’s approval. Amos Lugoloobi, the State Minister for Finance and Planning said the new loan offer from the African Development Bank and the Corporate Internationalization Fund of Spain comes with a 221 billion Shillings grant.

In a letter written to the Speaker of Parliament by Henry Musasizi, the Acting Minister of Finance, the old running loan is to be stopped since the terms are similar, and the new one adopted and asked Parliament to consider changes to the Resolution of Parliament dated May 11, 2022.

The Speaker of Parliament Anita Among said the House can only approve the new loan upon thorough and expeditious examination by the two committees for harmonization.

The African Development Bank (AfDB) Group Country Manager in Uganda, Augustine Kpehe Ngafuan said the new loan offer comes after the bank upped Uganda’s debt sustainability status from low risk to “moderate risk of debt distress.”

The Government of Uganda recently hit a deadlock with financiers over the proposed construction of the Standard Gauge Railway due to exorbitant interest rates and thus chose to revive the old railway in the interim.

Refurbishment of the Kampala – Malaba Meter Gauge Railway project is part of the infrastructural improvement program that seeks to meet the Government’s long-term development strategy as outlined in the National Development Plan III.

The strategy aims at increasing the stock and quality of productive infrastructure to support trade, industrialization, exports, and efficient urbanization as well as increasing the productivity, inclusiveness, and well-being of the population in the Northern corridor route of East African Community – EAC bloc.

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