The Ugandan government has lost some Ush392 billion ($96.2 million) in the last five years in commitment fees paid for unused loans.
A commitment fee is the amount of money charged by a lender to keep a specific loan available.
The Auditor-General, John Muwanga, said in his report for the Financial Year ending June 2022 that some Ush15.6 trillion ($4.2 billion) had been borrowed by the government, but the funds were yet to be disbursed, attracting commitment fees in the process.
“Government’s failure to draw down and low absorption of contracted government debt continue to attract high commitment fees and affect service delivery,” Muwanga said in the report as quoted by Daily Monitor.
Most of the undisbursed loans had been procured to build roads, hydropower plants and other development projects.
For instance, the Kampala-Jinja Expressway project was to be financed through an African Development Bank (ADB) loan of Ush842 billion ($225.5 million). The debt had been secured but not taken, drawing Ush3.97 billion ($1.1 million) in commitment fees, the auditor-general said.
