Uganda Taps Oil Fund for Budget Before Output Even Begins

KAMPALA (Capital Markets in Africa) – Uganda dipped into its Petroleum Fund for the first time by drawing 125.3 billion shillings ($33.9 million) to bridge its 2017-18 budget deficit, Finance Minister Matia Kasaija said.

East Africa’s third-biggest economy will spend the money in the 12 months through June, Kasaija said in a report on the ministry website, leaving the fund at 422.9 billion shillings.

Uganda, which is yet to start oil production, raised the money through tax and other non-tax measures, according to the report. The fund has shilling and dollar accounts at the central bank, and a Reserve Bank of New York account to facilitate investment from the fund set up 2015.

The nation planned to spend 29 trillion shillings this fiscal year and expected a financing gap of 5.1 percent. In February, the minister said the Treasury would borrow 736 billion shillings from the domestic market to fund the budget.

France’s Total SA, Cnooc Ltd. of China and London-based Tullow Oil Plc are jointly developing Uganda’s crude finds of as much as 1.7 billion barrels of recoverable oil and are expected to start production in 2020