The Ministry of Finance, Planning and Economic Development has established a Project Execution Unit to strengthen implementation of loan-funded projects and ensure that borrowed funds deliver the intended results.
This was revealed before the Committee on National Economy on Tuesday, 11 August 2026, where the Minister, Hon. Henry Musasizi, led a team of technical officers to present the ministry’s report on public debt, grants, guarantees and other financial liabilities.
The move comes amid persistent concerns from members over low utilisation and absorption of borrowed funds, which they say undermines the intended benefits of loans while increasing the country’s debt burden.
The Ag. Commissioner for Development Assistance and Regional Cooperation Department, Juvenal Muhumuza, said the Project Execution Unit will closely monitor implementation of projects and ensure that challenges affecting their performance are addressed.
“The unit will follow up issues affecting project performance on a regular basis and flag them to management for action,” said Muhumuza, who represented the Permanent Secretary.
Muhumuza also revealed that the ministry has tightened management of counterpart funding following cases of misuse by government entities. He said monitoring, approval and utilisation of counterpart funding has now been centralised under the Office of the Accountant General.
“This reform is aimed at addressing diversion of funds from intended purpose under, under budgeting, inadequate accountability and oversight of counterpart funding,” said Muhumuza.
He observed that poor performance of some loan-funded projects arises from delays in procurement, clearance of environmental reports and payment of contractors, among other implementation challenges. These bottlenecks have been addressed under new Standard Operating Procedures approved by Cabinet in March 2025, Muhumuza said.
He supported Musasizi’s position that Uganda can sustain its public debt if challenges affecting the performance of borrowed funds are addressed. In this he cited a facility established at the National Planning Authority to support timely preparation of feasibility studies and project designs.
Hon. Patrick Wakida (NRM, Kabweri County) expressed concern that government was not investing borrowed funds wisely, warning that the country could be heading towards a debt trap.
“If you look at how much of the debt we actually have, you realize it eats in the national budget, we are paying more to clear debts than investment,” he said.
Hon. Hassan Kirumira (NUP, Katikamu South) criticised government’s increasing reliance on borrowing from commercial banks, saying it was crowding out private sector borrowers.
Hon. Boniface Okot (NRM, Kole South) asked the ministry to address duplication of projects, where government entities operating within the same sector acquire loans to implement similar projects.
“The commercial banks prefer lending to government, as it is less risky. This makes access to credit for the private sector expensive. We need to minimize domestic borrowing in order to boost the private sector,” Kirumira said.
The committee asked the ministry to assess government entities with a history of poor loan utilisation and prioritise borrowing for institutions with demonstrated capacity to implement projects within agreed timelines.
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