News Column

Parliament Withdraws MPs' Loan Guarantees

May 16, 2014

Deo Walusimbi

To insulate parliament from bad loans, the Parliamentary Commission has stopped guaranteeing payment of MPs' loans. The commission directed the Clerk to Parliament, Jane Kibirige, to "stop" issuing commitment letters to all MPs who wish to take loans. The Observer has learnt that the decision was unanimously made in the commission's meeting held on May 2.

The meeting, chaired by Speaker Rebecca Kadaga, was attended by Deputy Speaker Jacob Oulanyah, Leader of Government Business and Prime Minister Amama Mbabazi and minister of state for Finance Fred Omach, among others.

"We instructed the clerk to parliament to stop the chief accountant of parliament from writing commitment letters for MPs to take to banks for loans," a commissioner told The Observer on condition of anonymity.

"The process has been that parliament issues a commitment letter that salary will be remitted through this account," the commissioner explained.

"We felt that this procedure is risky and has a lot of implications to parliament because members can default, then the burden to clear the loan would turn on parliament and banks were becoming abusive to this institution by turning us into their debt collecting agents."

Henceforth, the commissioner said, banks are expected to find ways of dealing with MPs on an individual basis without committing parliament to the private business of legislators. Asked about MPs whose loans were already guaranteed by parliament, the commissioner said: "The clerk was directed to clear (continue deducting from borrowers' salaries) the existing loans, but no new commitments will be undertaken."

The decision was precipitated by the need to uphold the integrity of parliament as well as the request by parliament's Sacco for a guarantee of members' loan requests.

"The commission felt it was becoming too much on the side of parliament," said the commissioner we spoke to. Another MP who didn't want to be identified told us that some of his highly-indebted colleagues had been asking parliament to sanction different accounts for them so that not all their pay ends up on one salary account to be chopped by the bank.

"They want it that way because some of them end up earning little or nothing at the end of the month; the moment the money is deposited on their normal accounts, banks take it," he said.

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Source: AllAfrica

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