Uganda is choking on debts amid excessive borrowings to fund local development projects, financial year budgets.
As of December 2020, Ministry of Finance reported that the country’s total debt stock stood at USD 17.96 billion (Shs 65.83 trillion) indicating an increase from USD 13.3 billion (Shs 49.0 trillion) as at end of December 2019.
“Out of the total public debt stock, External debt constitutes a share of 64.98 percent equivalent to USD 11.67 billion (Shs 42.6 trillion) whereas domestic debt constituted 35.02 percent equivalent to USD 6.29 billion (Shs 22.9 trillion),” Finance ministry reported earlier today.
The Shs65.83 trillion public debts indicate that creditors owe each Ugandan (42 million people) not less than Shs 1.2million.
The rise is public debt is also hinged on increased external and domestic borrowing to address the socio-economic impact of Covid-19 and mitigate the negative effects of the economy.
Uganda is currently seeking $900 million (Shs 3.2 trillion) in a three-year International Monetary Fund program for its budget amid rising spending due to the Covid-19 pandemic.
A look at Debt to GDP (nominal)ratio for other countries (2020) show Kenya at 69 percent,Rwanda at 60 percent,Burundi at 69 percent,Tanzania at 38 percent,Ethiopia at 55 percent,South Africa at 77 percent,United Kingdom at 85 percent and United States of America at 98 percent.
Uganda’s flagship projects that account for increase in debt include: Karuma hydropower project, Isimba dam, Oil roads, expansion of Entebbe international airport, Meter and Standard gauge railway, Development of Kampala industrial park etc.
Public debt which stood at 47.2 percent of GDP at end of December 2020 is projected to remain sustainable.
The ministry reported that the Public debt is projected to rise to 51.9 percent to GDP in FY 2021/22 on account of borrowing to finance key infrastructure projects especially in transport, oil and gas sectors.
Debt is projected to decline thereafter on account of increased domestic revenue as government implements the domestic revenue mobilisation strategy which targets to increase domestic revenue to GDP by 0.5 percent points per annum.