Prime
Govt pays Shs78b for unused loans annually

Expenditure on unused loans, the Auditor General says, denotes inefficiency in government, resulting in a huge cost to taxpayers. Photo / File
What you need to know:
- In the six years to June 2024, government has been spending an average of Shs78.2b annually, which brings the cumulative expenditure on unused loans to more than Shs469.7b
Government spent at least Shs73.9b on unused loans advanced to public projects by various lenders in the 2023/24 financial year, details in the Auditor General’s report indicate.
The expense was, however, lower than the Shs78b annual average that government has been spending on unused loans in the six years to June 2024.
Details contained in the annual Auditor General’s report indicate that unused loans had by June 2024 grown by 12.95 percent or Shs1.89 trillion to Shs14.6 trillion, forcing government to continue spending large sums of money in commitment fees against unused credit lines, which is contrary to the Public Debt and other Financial Liabilities Management Framework.
The Auditor General indicates that at least 17 government loans from the Debt Management and Financial Analysis System had been examined between June and December 2024, returning a performance average of 36.7 percent, yet all 17 projects had overrun their timelines by almost two years.
The report, among others, cites the Mbarara-Masaka Transmission Line, which was advanced a loan of €35m (Shs134.6b) from KWF on June 21, 2018, but by June 2024, only €0.112m or 0.3 percent had been utilised, with the project having expired almost two years ago on June 20, 2023.
The report further indicates that another loan from AFD of €37.1 (Shs142.6b) was, on April 27, 2018, advanced to the same project - Masaka-Mbarara Transmission Line – but only €0.121m or 0.33 percent had been utilised, with the project earmarked to close on December 31, 2024.
Other credit lines advanced to the Kampala City Roads Rehabilitation Project from ADB ($224m about Shs825.4b), Food Security through Rice Production from IDB ($34.05m about Shs130.9b), and Upgrade of Luwero-Butalangu Road from BADEA ($11.5m about Shs44.2b), all posted a performance rate of under 25 percent, just a month to their closure.
The report also cites other projects including Bukasa Inland Port, Namanve Kampala Industrial & Business Park, and Lake Victoria Maritime Communications, among others, as having received credit lines as early as 2016, but are yet to be completed, with performance averaging 50.1 percent.
Therefore, the Auditor General, noted that having examined the credit lines attached to the projects, it was clear that the loans would not be absorbed by the end of their tenure, thereby increasing government’s spending on the cost of servicing debt.
The Ministry of Finance, the report notes, told the Auditor General “that most of the projects have had their timelines extended to enable them to complete their planned activities,” attributing that delays to delayed procurement and land acquisition.
Data from the Auditor General also indicates that in the six years to June 2024, government has been spending an average of Shs78.2b annually, bringing the cumulative expenditure on unused loans to Shs469.77b in the period.
We could not readily get a comment from the Ministry of Finance. Phone calls and text messages to known mobile numbers of the Secretary to Treasury Ramathan Ggoobi and Ms Maris Wanyera, the Ministry of Finance acting director of cash and debt policy, went unanswered by press time.
However, the Auditor General noted that having outlined the danger of an increase in commitment fees - a cost of government inefficiency – the Secretary to the Treasury had “explained that government is implementing a Project Implementation Management System to ensure project readiness and improve absorption of funds”.
In October last year, Mr Ggoobi warned that accounting officers would be held accountable for project delays, noting that whereas government has over the years mobilised resources both domestically and externally to fund social and economic infrastructure, projects are often delayed and poorly implemented, thus resulting into substantial loss of taxpayers’ money.
This, he said was mostly common with donor-funded projects where disbursement of borrowed money takes years, yet commitment fees on such money are paid upfront.
“Accounting officers will henceforth, be personally liable for the cost of delays in project implementation … the performance of projects in various votes will be a performance measure for renewal of contracts for accounting officers,” Mr Ggoobi said then in a report, which noted that the poor performance of acquired loans was a result of delayed acquisition of the right of way, insufficient government counterpart funding, inadequate project preparedness, and delayed achievement of conditions of effectiveness.
The report also indicated that the World Bank had, during the year to June 2024, held the largest share of unused loans at $856m (Shs3.2 trillion), followed by the OPEC Fund with $52.3m (Shs192.7b).
Government, through the Ministry of Finance and the Prime Minister’s Delivery Unit, is currently examining the performance of 87 externally funded projects, focusing on progress to mitigate wastage of government funds.
Ministry of Finance reports indicate that the largest number of poorly performing projects are under agro-industrialisation, integrated transport and infrastructure services, and human capital development programmes, mostly in the education sub-programme.
The underperformance is largely due to poor planning, limited technical capacity of project design teams, poor project management with unclear deliverables, and limited stakeholder consultation and communication.