The Ministry of Finance, Planning and Economic Development has maintained that Uganda’s debt is quite sustainable and is among the safest in the region.
“Some people have portrayed a picture that Uganda has over-borrowed. That’s not true. Our Debt-to-GDP ratio is among one of in the region, but we want to keep it within our Chatter of Physical Responsibility which we have already gotten through parliament,” said Ramathan Ggoobi, the Permanent Secretary at the Ministry of Finance.
According to provisional figures at the Bank of Uganda up to the month of October 2021, Uganda’s public debt has risen to 73.8 trillion shillings (about 20.8 billion US dollars). By the end of June 2021, the Ministry of Finance, Planning, and Economic Development reported that the debt had gone up by more than a quarter to 69 trillion shillings (19.5 billion dollars) over the previous year.
But Ggoobi says that they will go for more concessional loans. “We are going to borrow largely concessional or longer-dated commercial in order to reduce the refinancing risk,” he says.
A concessional loan is a loan made on more favourable terms than the borrower could obtain in the market place. The concessional terms may be one or more of the following: a lower interest rate below (the most common) deferred repayments. income-contingent repayments.
In his statement on the commencement of the 2022/23 budget process, Finance Minister Matiya Kasaija partly blamed the rise in debt on the frequent supplementary budgets, some of which he said could be avoided.
“How do you bring a supplementary budget request for an international conference which you have expected to host for two years?” he wondered.
The ministry attributes this sharp rise in the national debt stock to the Covid-19 crisis, which it says has exacerbated Uganda’s fiscal position and development needs.
The total external debt exposure (outstanding stock of disbursed debt and committed but not yet disbursed debt) accounted for 62 percent of the total public debt in October 2021.
The outstanding stock of disbursed external debt amounted to 12.8 billion dollars, while that not yet disbursed was 4.3 billion.