IO

rHE REPUBUC OF UGA]IDA

?Stt'
r t 0i1
ERIEF TO PARIIAIIEiIT eo, l.\
RecEtv
o 30x I

fiE PROPOsAL TO BORROW UP TO EURO a55.03 lltlLlo]t

(EQU!V. TO USD,t54.t3!) FROit SilAilDARD CHARTERED BAr{t(
(sc8) Ailo oTHER FrilA]lCE !,ISTTTUIIOilS TO FrilA[CE rHE
DA'ELOPHETT A'ID IilFRASTRUCIURE 8T'OGET FOR THE FY
2022/ZI AS APPROPUATED
(&ief by dE Hm. Minisar of Finane, Hanning and E@nomic
fuel@rrent)

1. PURPOIiE

1.1 Rt. Hon. Speaker, this brief is for the purpose of seekirE
authorization of Parliament and as required under Mide
159 of the Constihrtion, to allow the @vemment to borrow
up to EURO 455.03 millbn (equiv. b USD .164.13) ftarfl
Standard CharEred Bank (SCB) and dher Finance
Institutions to finance the development and infrastnrcture
Budget for the FY 2022123

2. AAC|(GROI,,ID

2.1 Rt. Hon. Speaker, Standard Chartered Bank was choGen b

provide the abor€ mentoned loan followi,rg a call for
Expression of InErest made on 23d September 2021 to
various Financial Ins0tutions to provade the loan. Follo^,ing
the call fur Expression of Interest, sE eral Banks responded
i.e Africa Finane Corporation, Gti Bank UgEnda Limated,

I
trch.nla.rlc ol rs of 2:i iarch 202r, I €e.o : t.Ol999O USO
I
 Stanbic Bank Uganda Umited, Standard Chartered Bank
Uganda Ltd, United Bank of Africa t&Enda Ld, MUFG and

Trade Dqrdopment Bank Aftican Trade lnsrance Agency,

First Rand Bank, Africa Finance Corporation (AFC) and Absa
Bank among o$e6. @vernment revieu,ed their indicative
terms / financing proposals and Standard charEred Bank
(SCB) UK emerged the best bidder with Ule lo/vest
financing tenm. An.ter I five banks,
shovus dte beat
tlrcir ofiers rnd lankang done based on tlle coct of
ftmndng provaded to GovemmenL

2.2 The Ministry thereafter invited SCB on 21r February 2022

for negotiauons of the ffnancing Erms. SCB informed
@vemment of the c6sation of use of USD libor (London
interbank offered rate) as a benchmark rate for the
calculation of interest and requested @vernrnent to dariry
on the curency of funding that Go/ernment wall use to
obtain the loan. In consultation with the Central Bank, as
part of debt rumagement srategies, @vemment @ted to
take the loan in Euro currency rather ulan the united states
dollars. This was to take adlantage of the negative Eurabor
floating rate at -0.453o/o on the financjal markets compared
to the LIEOR rate at positive 0.979ryo prevailing at Elat time.
This automatically would save gorernment approx. USD

28.59m (EUR 25.76m).

2.3 During the negotrations, SCB proposed b syndicate and

raise the funds with NO(I (EUR 272.33 millaon), and ICIEC
(EUR f82.70 million). Nippon Export and Invesurent

2
 Insurane (NOO) is Ble Japanese Government trade and
invest nent insurance program estauished in 1950 as part of
its export promotion polacy, while the ldamk corpoGthn for
the lnsurance of Investment and Export Credit (ICIEC) as

the insurance arm or body of the Islamic Development Bank

(lsDB) Goup of which t g6nda is a member. The fina!
trmE ar€ pr€cented an Annex U.

2.4 Accordingly, the proposed loan of up to Euro 455.03 millbn

(equivalent b usD 464.13 million / uo( r,759.05tJillion) will
be prorrided by Standard CharEred Bank (UK) as the agent
and mandated lead arranger for the loan and a consortrum
of:

i) Nlppon Export and lnvestment In$rance C'NEXI") -

Euro 272.33 lrllllaon;
ii) lslamic @rporatbn for the lnsurarrce of Investment aM
Export Gedit (lqEC) - Euro l82.7oMillaon; and /or
iii) Other Financial instihfiions to be identified by SCB.

3. THE PR,OBLEII

3.1 Rt. tbn. Speaker, on 20b May 2022, Parliament approred the
budget for Fiscal Year 2022/23 equavalent to UGx 48,130.69
ELllaon.To finance the budget, Parliarnent appro\red budget
support borrowing (external) worth t shs. 2,$f .f9 Ballaon.

3.2 The proposed borrowing of Euro 455.O3 mllllon (€quayalent

to lrshs. 1r7:l4.3Bn) will therefore cover part of the
aporopriated t,3h3. z,s3t.rgullaon budget support loans /
 bonordng fu the FY 2022123. (* Ann€x lll for Ule
approt ed FY 202U23 apprcprhted bodg€t).

3.3 The propoGed loan frorn Standard Chartered Bank of Euro

455.03million is appoximatdy lldr. 1,727ulllon leaving a
balance of Usha 80{bllllon to be mobilised throqh addational
external borrowing.

3.4 The funds when obtained will be disburs€d in b the Consoladated

Fund and utilased to finance the appropriatd Dornestic
Developfirent budget acroEs all programmE.

3.5 In addition, the fLnds are part of quarEr 2 cash limits and the
funds are ready for disbursement one the loan is approrred by
Parlbment. The funds will help pay outstanding infrastsucture
ceruficaEs among others to avoad acumulating arears during
the financial year. Due b funding constraints, Government
funded ooly v/o d 6e FY Ql develQment budget. See Annex
lv for d€talb on the perto]mance of dE devclopment
hdget(F, mX2l23r.

3.6 fher€ ls thcrefore need to ercceed wlth proodng tftls

tunding (Eurc 455.03mllllon) dnce the ofrer€d r.te3 arl
loy, (NEXI facalaty wlth efiecdu€ anter€st rate d 2.98qb
ard ICIEC fadllty wlth effiyc lmer€st rate of 3.55qb)
comparcd to the prevalllng marftet lat€6 an tfie
anE n.tlonal .na.t€ts th.t ar€ aborre 506.

a
4. THE PROPioSCD Ft 2O22|23BUDGET SUPPToRT LOAII

4.1 SCB has moulised the resources / lran from the followirE
lnstihrtbns as shouvn an TaUe I b€lo^,:

IABLE 1: FITIAIICIIIG BY SOURCE

1{o. Fundlng Source Amount EURO Percentaoe

tlllllons
I NE(I 272.33 59/o
II ICIEC t82.70 4lolo
IOTAT EUR,O 4tt5.o3 t0O9o

4.2 FI]lAilCl]lG TER}IS

4.2.t The loan will be provided by a conmrtium of finance

instihrtions ananged by Standard Chartered Bank and
other finarce institutions i.e Nappon Export and
lnvertment Insurane CNB{") and Islamic
Corporation for the Insurance of Investment and
Expo.t Gedit oCIEC)) among othe6.

4.2.2 The IIEXI loan faciliw terms are as follors;

L@n amount: Euro 272.33million (equivalent

to approx. USD 2Somillion)
Maturity 10 years andudang grace period
of 4 years
Grace period: 4 years
Margin: t.90o.h

5
Interest rate: Entative I .900,6 6-months
Euribo. Cfaken as 0olo as RJRO
is still negawe as of 22d Mardl
2022) + margin)
Upftont fe€s: 1.5olo of the loan amount.

Commatsnent fees:
Guarantee / insurane hes:
Agency Fee:
0.57Yo on undisbursed atnount
of tfie loan.
9.349o of the loan amount
Euro 15,000 per yeal

4.2.3 The etr€cdve lnterest rat€ of the NEXI F.cility

Eum ban b 2.989{r.

4.2.4 fhe IGIEC loan fadllty tems ar€ .s follorv3i

Loan amoJnt: zuRO l82.7oMillion

(Equivalent to approx. USO
199 million)
Maturity: l0 years including grace
peraod of 4 years
Grae period: 4 years
Margin: 1.90o/o
lnterest rate: tentawe 1.90% Gmonths
Eurabor Oaken as 0/6 as
EURO is still negative as of
22d March 2022) + margin)
Upfront fees: 1.590 of the loan amount.

Crmmitsnent fees: 0.57% on undisburs€d

amorint of the loan.
Guarantee / insurane fees: 1.50o/o P€r Onnum
6
 Agency Fee: Euro 150,000 flat or Euro
15,000 per year.

4.2.5 tlre erwve lnw aE of dre *C IAEC

Fadlv Earo l@n ie 3,55t 6,

4.3 FIilAilCtl{GCONDmOT{S

4.3.1 The loans have the following terms and @nditions of

efiectiveness, among o6ers:
(i) approval by Parliament;
(iD Legal opinion of the Atbrney General on the loan
docurnentation;
(iii) Letter to the Banks authorising persons to sign
wathdrawal applacations together with spedmen
signahres.
(iv) Submission to the lenders of the list of proiects to be
funded from the loan.

5. TTIE PROPIOSED LOAII AI{O THE CURREiIT DEET S[ruATlOT

oF rflE coumRY

5.1 Currcnt Debt Poddon: As at end June 2022, the total

public debt stock increased by USD r.5 Ullion from USD r9.5
billion 6 at June 2021 and was recorded at USD 2l blllbn 6
at end June 2022. whereas both the dqne5 c and external
debt crmponents of the puuic debt sto(k anoeased, the share
of domes0c debt increased from 379o (USD 7.2 billion) b
39olo (USD 8.2 Hllbn). On the other hand, the share of
7
 external debt reduced ftom 630lo (USD 12.3 tillion) to 6lolo
fte btal debt stock. This increase in the pace
(12.8 billion) of
of grouuth of domesilc de$ sbck w6 largely on account of
irrcreas€d borrowang from the domestic market as oppo6e! to
the dwindling windors of o<temal financing.

5.2 Folloruing the grou,th of puHac debt, the nominal value of

public debt as a percentag€ of GDP stood at €.589o as at end

June 2022, inoeaGang trofn 46.7Wo registered in June 2021.

Similarv, the Present Value (PV) of total debt to GDP

ancreased frorn 37.600/o as at end June 2021 to zl0.liiol6 in

June 2022. (Source: Olr€ctorde of Debt and Cash
Polacy, l,loFPED)

6. COilCLrr$O]{

5.1 ln light of the above, I shall request tlon. Members to:-

a) Note the ne€d to procure the Budget Support Loan from

Standard Chartered and other Financial Instihttions in
order b finance Ule Got, Development and
lnfrastructure Budget for W FY 2022123 as
appropriated.

b) Endorse the request by Go/ernment to boro^, up to

Euro 455.03 millaon (equiv. to USD 464.13 million) from
Standard Oartered Bank and other finance institutionq
to finance the GoU Development and lnfrastsucure
&idget for the FY 2022/23 as appropriaH.

t
 c) Authorize the Go€mrnent by passang a Resoluton in
line with Article 159 of the consdtution, b borrow up to
Euro 455.03 millim (equiv. to USD .16{.13 million) from
Standard CharEred Bank and other finance institutions,
b finance Ue GoU De\rdQment and tnfrasfuch,re
Budget fbr the FY 2022123 as apprryiatsd,.

Preoarcd bv:
illnbttsy of Flnane, Phnnang & Econonlc Danelopnent
Ph 2-12, Apolb l6ggw. Road
P.O.8ox 8147
1(ampala

Octob€r 2022

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AilNEX llt: APPROVED ilArlO,I,TL BUOGET FORTI 2022123

Budgct

Fy maUzl
o/o
USHS. BN
A RESOI.JRCES INFLOWS

(l) Donxetic Reeourccs n,1n.8 76.{/o

o/w URA Tax Rcvcnuc 23,154.95 59.2%
o/ w Non Tax Rcvcnuc |,795.a9 4.50/,
o/w Pettoleum fund 0.(v/.
o/w Domcstic Financir 5,m7.93 12.sYo
o/ ,t, APpnlriztia in Aidl Laal Pa'cnut )E, ) 0.6%

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Budg€r n \6V9.U 6.5%

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o/w l,oaos 2S3Lt9 6.1o/o

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.)/$ l,oans 4,625.71 ll 5!6
TOTAL RESOURCES (T+2) qjz2.69 100.0/r

| &hr, thc hat

Dome stic Debt Re -fi nanc inr 8,0w.0

TOTAL RESO Ufr CE E AruEIOPE 1E,r3t.69

B) E:XPENDITURE (OUTFLOVS)
Ff NZ2/Z'

Rccurcnr Expenditurt 25g,8.m 63.3o/o

l2
I o/rv'00 6 166.88 16.ff/.
rrlv Noo Wage(crcl interest payrnents) 14259.42 35.8%
o/w Starutory lnterest Plyments _ 4,691.90 I t.8%

Dcvclopmenr Expcndimrc 14,565.98 fi.50/o

o/w GoU 7,E49.81 19.'ty.
o/w F.xtema.l Fioancing 6,7 t6.'t7 16.8o/o

Totd E:rpcnditulc 39,884.r8 100.V/o

Done st ic De bt Re -Ji nanc i ng 8,@8.t)0

o/ D, -4fpnpiation in ,4id/ laul Rcwntc 218.i2
Gnnd Totd locludinz Redcmotiottt 48,lil.69

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 T}IE REPUBLICOf U6A'{DA

ERIEF TO PARLUIIIENT

rHE PROPOSAL TO BORROW UP TO EURO 455.03 I,IILLIO]I

(EQUn. TO t SD a54.l3t) FROil STAI|DARD CHARTERED BA]{r
(sGB) Ar{D OT}|ER FI,{A,{CE I]ISIITUIIO]{S TO FrilArCE T}rE
DEVELOPTIIEilT A]ID I]IFRASTRUCruRE EUDGET FOR THE R,
2O22l23 AS APPROPRTATED
(Brief by he lbn. Minisar of Financ, Planning and Eonqnic
kwl@nent)

I PURPOSE

1.1 Rt. Hon. Speaker, this brief is for Ule purpose of seeking
authorization of Padiament and as required under Article
159 of the @ns$tution, to allou, the Goyemment to borrow
up to EURO 455.03 million (equiv. to USD 464.13) from
Standard CharEred Bank (SCB) and other Finance
lnstitstions to finance the develoFnent and anfrastrucUtre
Budget for the FY 2022123

2. EACTGROUI{D

2.1 RL Hon. Speaker, Standard Chartered Bank was chosen to

provide the abo\€ mentioned loan following a call for
Expression of tnterest made on 23d S€ptember 2O2l to
various Financial lnstituhons to provije the loan. Follo^ring
the call fff Expression of InHest, sareral Banls responded
i.e Africa Finance Corporation, Gti Eank Uganda Umited,
I
Cxctuqc rarc ot ar or 2:- Mrch m22, I tu.o : LOl9!199 t SO.
t
 StanHc Bank Uganda Umited, Standard Chartered Bank
Uganda Ld, United Bank of Af.ica t gEnda Ltd, MUFG and
Trade Development Bank African Trade Insurance Agency,
First Rand Bank, Africa Finan@ Corporation (AFC) arx, Ab6a
Bank arnong othe6. @vernment rerrieu,ed their indicath€
tems / financing proposals and Standard Chartered Bank
(SCB) Ul( eme€ed $e best bidder with the lonest
ffnanong Erms. Anner I shows tlre b€t llve banks,
tfielr offer and ranklng done ba6ed orr tlle @st of
financlng provlded to Governmsrt

2.2 The Ministsy thereafter invited SCB on 213 February 2022

for negotiauons of the financirE Erms. SCB informed
Go/ernment of the c6sation of use of USD labor (Lordon
interbank ofrered rate) as a benctrmark rate for the
calculauon of interest and requestd Govemment to dariry
on the crrency of funding that Gwernment will use to
obtain the loan. ln consultation with the Central Banh as
part of &bt nEnag€ment stsategies, @vernment opted to
take the loan in Euro currency rather than the United States
dollars. This was to take adlantage of the negative Euribor
floa$ng rate at -0.45306 on Ele financial markets compared
to the LIEOR rate at posative 0.979olo prevailing at that time.
This auto.natically would save governrnent approx. USD

28.59m (EUR 25.76m).

2.3 During the negotiations, SCB proposed to syndicate and

raise the funds wath NB0 (EUR 272.33 million), and lclEc
(EUR f82.70 million). Nippon Export and Invest nent

2
 Insuran@ (NB() is the Japan€se Government fade and
inesfnent insurance prqrram estauished in 1950 as part of
ib oeort promotbn policy, while the lslamac Grporation for
the Insurance d lnvestment and Export Gedit (IOEC) is
the insurarrce arm or body of the Islamic Development Bank
(IOB) Group of which UgEnda as a member. The Rn.l
ErG arc pl€enEd an Annex ll.
2.4 Accordingly, the proposed loan of up to Euro 455.03 millaon
(equivalent to USD 464.13 million / Uq 1,759.05Elillion) will
be prorided by StanGrd Caartered Bank (UK) as the agent
and mandated lead aranger for the loan and a @nsortium
of:

i) Nappon Export ard lnvesunent lnsurance C'NBO") -

Eum 272.33 trlllllon;
ai) Idamk Crrporauon for the Insurane of Investment and
Export Gedit oCIEC) - Euro t82.7oMillion; and /or
iii) Other Financial institutions to be identified by SCB.

3. THEPROEIEm

3.1 Rt. Hon. Speaker, on 20s May 2022, Parliament approred the
budget for Fiscal Year 2022123 equivalent b UGX 48,130.69
To finance the budget Parliament approred budget
Elillion.
support bonowing (external)
'irorth t shs. 2,531.19 Bllllon.

3.2 The proposed borrowing of Euro 155.O3 mllllon (equivalent

to Ushs. 1r734.38n) will therefore cover part of the
appropriated ushs. 2,$r.rgulbn hrdget support loans /
 bonot^,ing for the FY 2022123. (* Arnex ttt ,or $e
approt €d FY 2OZfl8 appropriated budget).

3.3 The proposed loan from Standard Charered Bank of Euro

455.03million is approximaEly lfhs. &727blllbn leaving a
bahnce of llshs. Soablllaolt to b€ mobilised through addithnal
e)fternal borrowing.

3.4 The funds when obtained will be dasbursed in to the Consolidated

Fund and utilis€d to finane the appropriaEd Domestic
Det elopment budgEt aooss all programmes.

3.5 ln addition, the funds are part of quarter 2 ca$ limats and Ule
funds are ready for disbursement one the loan is approved by
Padiament. The funds will hdp pay outstanding infrastruchtre
certmciites among others to avoid acamulating arrears durang
the financial year. Due to funding constraints, Govemment
funded only 70,6 of the FY Ql devd@ment budgeL See Annex
lV for d€taab on the p€rrormance d the devdopment
budget (FY 2O22l23).

3.6 fher€ b $ercfore to proc€€d wlth procurlng thls

ne€d
fundlng (Eurc 4ss.O3mallaon) since the ofrsed 6te6 .r€
low (llfll fadlaty wi6r erfiective intercst tate of 2.98q/o
and IGIEC fadllty wlth etrecfive antercst rate of 3.5506)
omparcd b tte prruaallng market lat€s an the
internadonal markcts that ar€ .boye 5q6.

4
4. rHE pROproSCD Ft 2O22|zSBIiD6,ETS,PPORI LOAI{

4.1 SCB has rnohlas€d the resources / loan from the follovving
Institutbns as shown in Table I below:

TABLE 1: FIrlAIlClllG BY SOURCE

llo. Fundlng Source A.munt EURO Percentage
1{allaonc
I ND(I 272.33 59o/o

ll. ICIEC t82.70 9.l%o

TOTAT EURO .llts.O3 l0O9o

..2 FINAI{CINGTER}IS

4.2.t The loan will be provided by a consortium of finance

institutions ananged bV Standard CharM Bank and
other finance instihrtions i.e Nippon Export and
lnveEtment Insurance ("NExn and lslamac
Corporation br the lnsuGnce of lnvestsnent and
Export Credit (ICIEC)) among others.

4.2.2 The ilEXl loan facility terms are as follo,vs;

Loan amount Euro 272.33million (equivalent

to approx. USD 2somillion)
Maturity l0 years indudang grace perhd
of 4 years
Gace period: 4 years
Margin: I 90P/o
5
lnterest rate: tentative l.9006 6-months
Euribor (Taken as 09o as EURO
is still n€gative as of 22d Mardr
2022) + margan)
Upfront ftes: 1.5olo of the loan amount.

Commatment fees:
0.57% on undisburs€d amount
of the loan.
Guarantee / insurane ft€s: 9.3.1olo of the loan amount
Agency Fee: Euro 15,0q) per yeal

4.2.3 The effecdve lnter€st ratE of the ]{EXl Fadllty

Eurc ban b Z98q/o.

4.2.1 The ICIEC loan fadltty terms .r€ G 6ollows;

L@n arnount: EURO 182.70Million

(Equivalent to appox. USD
199 million)
llaturity l0 yea6 induding grae
period of 4 years
Grace period: 4 yea6
Margin: 1.9)9o
Interest rate: tentative f .900,6 Gmonths
Euribor Oaken os 0olo 0s
EURO is still negBtive as of
22d March 2022) + margin)
Upfront fees: 1.5% of the loan amount.

Commitsnent fees: 0.579o on undisbursed

amount of the loan.
Guarantee / insunnce fees: 1.5@,6 per annum
6
 Agency Fee: Euro 150,0fi) flat or Euro
15,000 per year.

1.2.5 tTE ertL\dve lnw nE d dE 1CB IAEC

Faclllty Earo bn b 3.5596,

4.3 Ftl{AlrCrtGCO]{DmO]{S

4.3.1 The loans have the following tenns and conditions of

efiectiveness, among oth€rs:
(i) Approval by Parliament;
(iD Legal opinion of the Attorney General on the loan
documentation;
(iiD Letter b
the Banks authodsing persom to sign
witMrawal apdacations toge0Er with specimen
signatures.
(iv) Submission to the lenders of the list of proiects to be
funded from the loan.

5. rHE PROPOSED LOATI A]{D T}IE GURRE]|T DEET $TUArIOil

Of I}IE COUITRY

5.1 Current Debt Pociuon: As at end )une 2022, Ule total

public debt sbck inseas€d by USD 1.5 ballion from USD r9.5
billion as at June 2021 and was recorded at USD 2l Ullion as
at end June 2022. Whereas both the domestic and extemal
debt components of the puuic debt stock increased, the share
of domestic debt inoeased hon 37o/o (USD 7.2 Hllion) to
39o/o (USD 8.2 billion). On the other hand, the share of
?
 external debt redEed from 63% (USD 12.3 tillion) to 6lolo
(12.8 billbn) of the total debt stock. This incr@se in the pace
of growth of domestic dee sbck was largdy on acaqmt of
inseased borlotfling from the domestic market as opposd to
the dwindling windows of external finarring.

5.2 Follofling the groivttr of public debt, the nominal value of

pubtc debt as a percentage of GDP stood at tl8.58o6 as at end
J|/ne 2022, increasing hfii 46.7Vh r€gistered in June 2021.
similarv, the Present value (Pv) of total debt to GDP

increased from 37.600/o as at end June 2021 to 40.17olo in

June 2022. (Source: Dlrectorate of DeE a.d Cash
Polky, l,loFPED)

6. COltCLt lito0t

5.1 ln light of the above, I shall reqnest Hon. Membe6 to:-

a) Note the need b procure the Budget Support Loan from

Standard Chartered and other Finarraal Institutions in
order tofinance the GolJ Devdopment and
lnfrastructure Budget for $E FY 2022123 as
appr@raated.

b) Endorse the request by @vernment to borow up b

Euro 455.03 million (equiv. to USD .16l.13 million) from
Standard Charbred Bank ard other finance institutbns,
b finance the GoU Development and Infrastsucttre
tudget for the FY 2022/23 as appropriated.

8
 c) Authoraze the Gorernment by passing a Resolution in
line with AItide 159 of the Constitution, b brrov{ up to
Euro 455.03 millbn (equiv. to USD 464.f3 million) fro.n
Standard CharEred Bank and other finance insttutions,
to finance dle GolJ Da/elopment and Infrasfuct.re
tudget tor the FY 2022123 as aryofriated,.

Prcoated by:
mantrntsy of Fin nce, Plannlng & Economk Darelopment
Plot 2-1& Apollo Kaggwa Road
P.O. 8ox Et47
Kampala

October 2O22

9
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AilIIEX IIII: APPROVEO IIATIO]|AL EI,DGET F'ORfl M2:212j3

Budgct

F\U2/23
USHS. BN ./o

A RESOIJRCES INFLOWS

Domcatic Bcsourcce fi,1n.8 76.V/o

o/w UlLrVl ax Revcnuc 154.95 59.T/;
o/ rv Non Tar Rcvcnue I 4.5v.
o/w Pctrclcum fund 0.eh
o w f)omestic Finarc 93 tLS,/o
o/ y AlDtopriafn, i,, Aid/ Laul Rcuruc 2)8.t 0.6%

(2) Exremal Rceourcce 9,3?l.41 2r.rh

u 6.5"1,
o/w Grants 78.05 o.2.
o w lorns 19 6.tvo

cci n 6,716.17 16.70,i

o/w Grants 2,$O.44
o/w lnans 4 5.71 I l.Sozn
TOTALRESOURCES + tx\.69 100.v

* Aclov tlr linc

Domeslic Debt t u8.o

TOTAL RESOARCE EIWE IOPE 48,rJt.69

EXPENDITURE o I
FY L'

Recurrcnr t! 25,3t8.4) 6t.5Y.

l2
 o,/w !& 6 88 t6.{P/o
o/w Non W crcl inrcrcst 14,259.42 !5.tg/o
tu I ntcrcst Dts .t I 90 ll .lr9i

E. nditul€ l4 98 34.Sc/o

o/s GoU 7 19.70/o

o/w Errcnral ljinaocin,{ (r,716.17 16.yh

Totd Expcoditurt t9,884.r8 w.t/.

Donest i c De bt Re -fi nanc inp 8,008.@

,d l.oal kurue ,E.t2
Gnad Tot loctuding Rfuodoao 4130.69

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 T}IC REPUBUG OF T'GA]IDA

BRIEF TO PARLTATIENT

TllEPROPOSAL IO BORROW UP TO EURO 455.03 l,llluoll

(EQU!V. TO rrSD 464.13!) FROH STAI|DARD CHARTEREO EANK
(scB) AND OTITER FrrA]lCE mSTtTUTtOilS TO FrilAr{CE THE
DEVELOPI,IEI|T AllD INFRAIiIRUCruRE BUDGEI FOR IHE Rl
2O22l 2i' AS APPROPRTAIED
(grief by dre Hon. lt inisar of Fhrane, Planning and E@nomic
halqnent)

I. PURPIOSE

l.l Rt. Hon. Speaker, this bief is for the purpose of seeking
authorazation of Parliarnent and as required under Artide
159 of the constihrtion, b allon, the @\remment to tprrow
up to EURO 455.03 million (equiv. b usD 464.13) from
Standard Chartsred Bank (SCB) and other Finane
lnstitutions to finance [re development and infrastructu]e
Budget for the FY 2022/23

2. 8ACl(GROlrrD

2.1 Rt. Hon. Speaker, Standard Chartered Bank was ctlo6en b

proride the above mentioned loan bllowing a call ftr
Expr6sion of InEre€t made on 23d September 2O2l b
various Financial Institrrtions to provire the loan. follotlving
the call for Expression of tnterest, ssreral Banks rEponded
i.e Africa Finan@ Corporation, Gti Bank Ugnda Limited,
|
€Ithdt. rarr o, &o122{Ma(h 2022,1tu.o:1019999 USO.
t
 Stanuc Bank Uganda Umatd, Standard Grartered Bank

UgEnda Ltd, United Bank of Africa t4Enda LU, MUFG and

Trade Development Bank African Trade lnsurane Agency,
First Rand 8ank, Africa Finance Corporation (AFC) and Absa
Bank among others. Government rarieurcd th€ir indicative
terms / financing pro@sals and Standard Chartered Bank
(SCB) U(, the best tidder with U€ lo^,est
emerged
frnancing terms. Anner I shows tte best five banks,
thdr ofres and ranklng done baced on the co6t ot
ftmnclng provlded to Gov€rnmenL

2.2 The Minisw thereafter invited SCB on 21r February 2022

for negotiations of the financlng Erms. SCB informed
Goivemorent of the cessation of use of t SD libor (London
anterbank offered rate) as a benchmark rate for the
calcubfron of interest and r€quested @vernment to cJarin,
on the cun$cy of funding that Govemment will use to
obtain Ule loan. ln consu[auon with the Central Bank. as
part of debt management strategiet Govemment @ted to
take the loan in Euro cunency rather than the United StaEs
dollars. This was to take advanbge of the negEtive Euribor
f,oating rate at -0.453olo on the financial markets co.npared
to the LIgoR rate at positive 0.979/o prevailing at that time.
Thas automaucally would save govemment approx. USD
28.59m (EUR 25.76m).

2.3 Dudng the negouauons, SCB proposed b syndicate and

raise the tunds with No(I (EUR 272.33 million). and ICIEC
(EUR f82.70 million). Nippon Export and lnvestrnent

2
 Insurance (NE{) is the Japanese Government trade and
invesErent insurance program est;uished in 1950 s part of
its export promotbn policy, while the Islamk @rporation for
the Insurarrce of Investsn€nt and Export Gedit (ICIEC) is
the insurance arm or body of the lslamac De\relopment Bank
(ISDB) G.oup of which Uganda as a member. The ftml
terms ar€ pr€s€nt€d an Annex lI.
2.4 Accordingly, the proposed loan of up to Euro 455.03 million
(equivalent to USD 464.13 milllrn / U6( l,759.05Bllion) will
be prorrided by Standard CharEed Bank (UK) as the agent
and mandated lead arrarEEr fo the loan and a consortum
of:

i) Nippon Export and Investment lnsurance CNEXI") -

Eurc 272.33 l,lllllon;
ii) Islamic Corporation for the Insurance of Investment and
Export Credit (IOEC) - Euro t82.7oMilion; and /or
iii) Other Financial institrtions to be identified by SC8.

3. THE PRO8]EI,I

3.1 Rt. Hon. Speaker, on 2oti May 2022, Padiament approred the
budget for Fiscal Year 2022123 quivalent to UGX 48,130.69
ELllion.To finance the budget, Padiament approred budget
support borrowing (external) wor$ U$s. 2,53f.19 Billlon.

3.2 The proposed bonowing of Eurc t055.03 mlllion (€quiv.lent

to Ush6. ,734.38n) will therefoe cover part of the
appropriated lrshs. 2,531.t9blllaon budget support loam /
 borro,ving for the FY 2022123. (*e Anrcr lll for tte
approved F( 2022123 aggrogdatGd hrdg€t).

3.3 The proposed loan from Standard Chartered Bank of Euro

455.03milliofl is appoximately t shs. l,727ullbn leaving a
balance of lrsh6. So4billbn to b€ motilised throqh additional
external bonowirE.

3.4 The funG when obtained will be disbursed in to the Consolidated

Fund and utalis€d to finane the appropriated Domestic
Dwd@ment budget across all prqfamrnes.

3.5 In addition, the funds are part of quarter 2 cash lamits and the

funds are ready for disbursement once the loan as approred by

Padiarnent. The funds will help pay outstanding infrastructJre
certifkates among others to avoid accumulating arrears durirE
the financial year. Due to funding consuaints, Govemment
funded only 70,6 of the FY Ql development budget. See Annex
lV for detalls on tte per5orm.nce of tln deudopment
brdget(FY m22123).

3.6 fherc b tlr€r€forc need b wltfi prcanrlng thls

proce€d
fundlng (Euro 4ss.O3mllllon) sinc€ the der€d ..tes .re
low (ilEXI ,acllaty wlth effective ant€r€st r.te of 2.98%
and ICIEG facalaty wath effecdye ant€r€st rate of 3.55q/b)
comparcd b the prerralllng martet rat€s an the
internadonal markcts tltat ar€ abore 5o6.

4
4. TltE PROPToT'ED FY 20Zr/8 BITOGETSUPPioRTLOAII

4.1 SCB has rnobilised the resources / loan from the follcwing
lnstitutbns as sho^rn in Table I belour:

TAELE I: FI,IAIICIilG AY SOURGE

,lo. Furdlng Source Arnoont EURO Perc€ntage

illllaons
I NO(I 272.31 59/o
II tctEc r82.70 4lo/o

IOTAL EURO {tts.03 tooq6

4.2 Fr{AilGrtG rERr.tS

1.2.L The loan will be provided by a consortium of finance

instituuons arranged by Standard CharEred Bank and
other finance in*ihrtions i.e Nlppon Export and
lnvestment lnsuran@ CNOO") and Islamic
Coporation br the lnsurance of Investment and
Export Credit (lClEC)) among others.

4.2.2 The llul loan facalify terms are as follorvs;

Loan ariount: Euro 272.33million (equivalent

to approx. usD 2$million)
Maturity l0 years induding grace period
of 4 years
Grae period: 4 years
Margin: L90o/o

3
Interest raE: tentauve 1.900,6 6-months
Euribor Oaken as O% as EURO
is still neg6we as of 22d Mardr
2022) + margin)
Upfront fees: l.5olo of the loan arnount.

Commitsnent fees: 0.579o on undisburs€d arnount

of the loan.
Guarantee / insurance fees: 9.34olo of the loan amount
Agency Fee: Euro 15,flD per year

1.2.3 fhe efrecffve arE €st r.te d th€ ilExI Facallty

Cu,o loan b 2.9896.

4.2.4 The ICIEG loan fadlity t€nc arc G follows;

Loan amount: EURO 182.70Million

(Equivalent to approx. USD
199 millaon)
maturity l0 years irrhding grae
period of 4 years
Grace period: 4 years
Margin: 1.90o/o
Interest raE: tentative 1.90o/o 6-months
Euribo (Iakan as 00,6 as
EURO is still negative as of
22d Maid't 2022) + margin)
Upfront fees: l.5olo of the loan amount

Commitsnent fees: O.57Vo on undisbursed

amount of the loan.
Gua6ntee / insurance fees: 1.50o/o Per 6nnum
6
 Agency Fee: Euro 150,flD flat or Euro
15,000 per year.

4.2.5 Tlp ellediYe inw tab d tE *8 ICIEC

FacilW Euto tuo ls 3,5596.

4.3 Frl{ANCrr{GCONDmOilS

4.3.1 The loans have the follorvirE tenns and conditions of

effectivenEs, among others:
(D Approral by Parliament;
(iD Legal @inion of the Atbrney General on the loan
documentation;
(iiD LeBer to the Bank authorising persons to sign
witMrawal apdications together with specimen
sagnatures.
(iv) Submission to the lenders of Ule list of projecB b be
funded from the loan.

5. T}IE PROPIOSED LOA]{ AIID T}IE CURREI{T DEBT STN.,ATIOII

OFT}IE GOUTTRY

5.1 Cun€rlt Debt Pocldon: As at end June 2022, the total

pnblic debt stoct increased by USD f.5 billion from USD 19.5
tillion as at June 2021 and was recorded at USD 21 Ullion as
at end June 2022. Whereas both Ule domes c and external
debt components of the public debt stock anoeased, the share
of domestic debt increased frcm 37o/o (USD 7.2 billion) to
39,6 (USD 8.2 tillion). On the other hand, the *ure of
7
 external deu rcduced from 630lo (USD 12.3 billion) to 6lolo
(12.8 Ullion) of the btal debt stock. This ins@se in the pace
of gror{th of domestic debt stock w6 largdy on acoount of
increas€d bonoHng from the domestic market as opposed to
the dwindling windows of external financing.

5.2 Folloruing the growth of public debt, the nomanal value of

public debt as a per€entage of GDP stood at 48.58o/o as at end

June 2022, inseasing trom 46.7@/o registered in lune 2021.

similady, the Present value (Py) of total debt to GDP

ancreased from 37.600,6 as at end June 2021 to 40. Ue,6 in

lune 2022. (Sourca: Dir€cbrate of Debt ard Csh

Poftcy, ttoFPED)

6. COilCLtStO]l

5.1 In light of the above, I shall request Hon. Members to:-

a) Note the need b procure Ute Budget Support Loan from

Standard Chartered and other Financaal lr6tibtions an

order to Got Oevelogflent and

finance Ure
lnfrasBucture &dget for U|e FY 2022123 6
appropriated.

b) Endorse the request by Govemment to borrow up to

Euro 455.03 mallion (equiv. to USD 464.13 million) from
Standard Chartered Bank and other finance institutions,
to finance ule Got Development and Infrasructure
Budget for the FY m22l23 as appropriated.

6
 c) Authorize the Gorernment by pas$ng a Resolution in
line with Artide 159 of the constihttion, b borrow up to
Euro 455.03 million (equiv. to USD 464.f3 million) fro.n
Standard Chartered Bank and other finance institutions.
b finarrce Ule @U D€^/elognent and Infrastruct re
Budget for the FY 2022123 as aryopriated.

Fleoar€d bY:
Hlnlstry of Flnance, Plannang & Ecooomk Dardopmstt
Plot 2-12, Apollo l699wa Road
P.O. Box 8147
t(ampala

Ocbb€r 2022

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AI{I{EX III: APPROVED NAIIO,IAL EUDGET FIORFI( z,,22123

Budgcr

Fv ma2/zt

USHS. BN %
A) RESOURCES ( TNFLOVS)

Domcstic Rcsoucce 7n.a 76-V/.

o/w URA 'l ax Revenue 23,7 4.95 59.vh
o/ w Non l ax Revenuc 1,795.9) 4.5v.
o/w Pctrolcum fuod 0.uh
o/w Domcstic Financing 5,007.93 l2.sVo
it Aid/ Iszl Rarnu 2r8.t 0.60/0

(2) E (tcmal Rcsourc.€ 9,32l.4t Zl2/t

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o/w loans 453r.19 6.3vo

6;7t6.fi 16.7y.
o/w (;iants z,ffN.46 5.!/.
o/s l.oans 4 $25.71 ll 5"h
TOTAL RESOI'IRCES (t+2) 4,txl69 t00.v/o

I llx lint
Bclot,
Domestic Debl Re-fnancinq 8,0w.0

TOTAL RESO U RCE E NVE I.O PE ,At r:10.69

B EXPENDITT'IRE ouTFt,ows
F.( N2,/2!

Rccurtnt Expcnditurr 253,8.m 61.5o/o

t2
 o/w W (t tttt 16.ff/"
o/w Non Wagc(cxcl iotcrcst paymcns) 14,259.42 35.V
o/w Starutorv lotcrcst Paymcnts {,691.90 ll v/"

Developmcnr Expendirule 14565.98 16.5o/o

o/w GoU 7,849.8t 11).7.h
o/w F,xtemal Financing 6,116.|i 16.9h
Torel Expcnditurr 39,884.r8 [n.v/o

hme sl ic De b, Re -li nanc in. 8.tx)t.00

o/ v zl ,oOriation ir Aid/ Lprzl lltll"arc 2t8. t?
Gand Tot lncludiry Redemptions ,9.69

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 ,!a at atrDalar.,t Ministry of FinaDc., Planning &
!a at atlxqa
C-I
w.hr : &rsi&Er,tsr3
: Eaonomic Dcvclopmcr ,
!E!E !ls|lrr!!
n a iL r{ AF- X.arE r-a
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P.O Box tl47
l. .., .tGFdao K.mp.b, UBr.dr
lra. rarrr F.. t .. t a!r!r/al
^l, ,iR(

3.d October 2022

1.0?l
I t} oci
The Clerk to Parliament,
Parliamcntary Building,
I(AXPALA.

BRIEF OlI T}IE PROPIOsAL TO BORROW UP TO EURO 455.03

tlttl.lOl{ (EQUw. TO USD.164.13) FROm SiIATIDARD C}IARTERED
8Ailr (SC8) AilO OTHER Frlr l{CE ll{$TruTrol{S lO FlLAl{CE
T}IE OEVELOPiIANT A1{O IilFRASTRI'ICTURE SUOGET FOR THE FII
2022123
ln line with Article 159(l) & (2) of rhe constitution and section 36 (l) &
(5) of the public Finance Management Act, 2015, Govcrnment can borrow
from any source as prescribed by an act of Parliament and the terms and
conditions of the loan/ borrowing (except loans raised through issuance
of securities or for the manegement of monctary policy) must be approved
by Perliement.
The purpose of this letter is therefore to;

l. Forward three (3) copies of the Minister's bri€f to Parliament

seeking the authorization of Parliament to allow the above
mention€d borrowing; and

2. Request you ro make arrangements for my Minister to lay the

hnancing terns on the table of Parliament, and subsequently
arrange for the presentation of the request b€fore Hon. Members
on the Committe€ of National Economy.

Rarna goo
PERXAIIEI{T SECRETARY/ADCRETATTY TO TEA TRBAAUNY

fnldda. otd @ FJn( pr..rr ,EE -,rr,,rir d*r.t ua.t@a 64 lo tti,tk Rffit Nqb
dt^.,h.
-x
t:t dc,tt tu'd)L&dk ifttcd.kvlq(r' 's-.Nd
Copy to:
The Speaker of Parliament, Parliament of Uganda.
The Rt. Hon. Prime Minister, Omce of the hime Minister.
The Hon. Minister, Ministry of Finance, Planning and Economic
Development.
All Ministerc of State for Finance Planning and Economic D€velopment,
The Chairman / Parlia.mentary Committ€e on National Economy.

Ib/n
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