BoU Governor Emmanuel Tumusiime-Mutebile. COURTESY PHOTO

Bank of Uganda (BoU) has said Uganda’s debt remains sustainable despite the total public debt stock rising to 45.5 percent of the country’s GDP.

In their annual report for 2021, BoU said the provisional total public debt stock (in nominal value) as of June 2021 stood at Shs67.395.9 trillion (45.5 percent of GDP), increasing by 17.3 percent in FY 2020/21.

BoU said the increase was mainly due to a 35.2 percent growth in domestic debt stock. External debt stock also grew by 9.0 percent during the period under review due to increased borrowing from multilateral and bilateral creditors, according to the central bank.

External debt continued to make up the bulk of the public debt, accounting for 66.2 percent of the total public debt, the report states.

But amid the increase in borrowing, BoU says Uganda’s debt remains sustainable, with a low risk of default in the medium to long term.

However, BoU warns of some vulnerabilities arising from weak exports and low tax revenues reflecting subdued economic activity.

“Indeed, the ratio of debt service to domestic revenue has steadily increased over the last decade, rising to 25.6 percent in June 2021 from 12.7 percent in June 2010, reflecting higher debt service costs that may crowd out spending to priority sectors of the economy,” the report states.