Finance Ministry Launches Unit to Boost Loan Project Execution

Recognizing persistent issues with the slow uptake and utilization of borrowed funds, the Ministry of Finance, Planning and Economic Development has created a dedicated Project Execution Unit. This new body aims to bolster the implementation of projects financed by loans, ensuring that the country derives maximum benefit from its debt.

The establishment of the unit was announced to the Committee on National Economy by Minister Hon. Henry Musasizi and his technical team. The move comes in response to concerns from legislators who have highlighted how inefficient loan absorption can undermine project objectives and exacerbate Uganda’s national debt.

According to Juvenal Muhumuza, Ag. Commissioner for Development Assistance and Regional Cooperation, the Project Execution Unit will proactively monitor project progress. “The unit will follow up issues affecting project performance on a regular basis and flag them to management for action,” Muhumuza stated, emphasizing the unit’s role in identifying and resolving challenges that hinder project success.

Furthermore, the Ministry has reinforced controls over counterpart funding, a contribution required from the government for certain donor-funded projects. Misuse of these funds has led to the centralization of their monitoring, approval, and utilization under the Office of the Accountant General. This reform aims to prevent fund diversion, under-budgeting, and inadequate oversight.

Delays in procurement, environmental report approvals, and contractor payments have been identified as key bottlenecks. Muhumuza noted that new Standard Operating Procedures, approved by Cabinet in March 2025, are in place to address these implementation hurdles.

Lawmakers, however, continue to voice concerns. Hon. Patrick Wakida warned of a potential debt trap if borrowed funds are not invested wisely, citing the significant portion of the national budget allocated to debt servicing. Hon. Hassan Kirumira pointed to government’s reliance on commercial banks, which he argued crowds out private sector access to credit. The committee has urged the Ministry to assess entities with poor loan utilization records and prioritize funding for those with a proven capacity for timely project execution.

Source: Parliament of Uganda