The Ministry of Finance, Planning and Economic Development has established a Project Execution Unit to improve the implementation of loan-funded projects and ensure borrowed funds deliver their intended results.
The move was disclosed on Tuesday before the Parliamentary Committee on National Economy, where Finance Minister Henry Musasizi led a team of ministry officials to present a report on public debt, grants, guarantees and other financial liabilities.
The establishment of the unit comes amid concerns by legislators over the slow utilisation and absorption of borrowed funds, which they say undermines the benefits of loans while increasing the country’s debt burden.
Juvenal Muhumuza, the acting Commissioner for Development Assistance and Regional Cooperation, said the new unit will closely monitor the implementation of projects and ensure challenges affecting their performance are promptly addressed.
“The unit will follow up issues affecting project performance on a regular basis and flag them to management for action,” Muhumuza, who represented the ministry’s Permanent Secretary, told the committee.
Muhumuza also said the ministry has tightened management of counterpart funding following cases of misuse by government entities.
He said the monitoring, approval and utilisation of counterpart funding has been centralised under the Office of the Accountant General.
“This reform is aimed at addressing diversion of funds from the intended purpose, under-budgeting, inadequate accountability and oversight of counterpart funding,” he said.
Muhumuza attributed the poor performance of some loan-funded projects to delays in procurement, clearance of environmental reports and payment of contractors, among other implementation challenges.
He said the government has addressed some of the bottlenecks through new Standard Operating Procedures approved by Cabinet in March 2025.
Muhumuza also backed Musasizi’s position that Uganda’s public debt remains sustainable if challenges affecting the performance of borrowed funds are addressed.
He pointed to a facility established at the National Planning Authority to support the timely preparation of feasibility studies and project designs as one of the measures aimed at improving project implementation.
However, legislators raised concerns over the government’s borrowing strategy and the utilisation of borrowed funds.
Patrick Wakida (NRM, Kabweri County) warned that poor investment of borrowed money could push the country into a debt trap.
“If you look at how much of the debt we actually have, you realise it eats into the national budget. We are paying more to clear debts than investing,” Wakida said.
Hassan Kirumira (NUP, Katikamu South) criticised the government’s growing reliance on commercial bank borrowing, saying it was making credit more expensive for private sector borrowers.
“Commercial banks prefer lending to government because it is less risky. This makes access to credit for the private sector expensive. We need to minimise domestic borrowing in order to boost the private sector,” Kirumira said.
Boniface Okot (NRM, Kole South) asked the ministry to address duplication of projects, where government agencies operating in the same sector obtain separate loans to implement similar projects.
The committee also asked the Finance 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.
The legislators said improving project implementation and absorption of borrowed funds would help ensure that new borrowing translates into productive investments and reduces pressure on the national budget.
