Uganda’s Finance Ministry stuck with Shs14 trillion unspent loans

The Ministry of Finance has revealed that Uganda is stuck with loans worth Shs14.301 trillion that were procured but are lying idle and remain undisbursed.

 The details are contained in the Report on Public Debt, Grants, Guarantees, and Other Financial Liabilities For Financial Year 2023/2024 that the Ministry Of Finance released that is prepared every financial year and laid before Parliament per the Public Finance Management Act, (2015) Sections 39(4),42 (2-3) & 44(5).

The prolonged loan approval process where a single loan takes 756 days is cited as one of the reasons behind the delays in the execution of public projects.

“The current loan approval processes are so lengthy with duplicated responsibility centers thus need for a review. Current average time taken during the loan approval process is approximately 756 days. International Development Agency-World Bank, ADB, and Islamic Development Bank (IDB) hold the largest share of undisbursed debt stock with 25%, 16% and 10% respectively. It is worth noting that the undisbursed debt stock for IDA and ADB have reduced by 4 percent and 2 percent,” added the report.

The Ministry of Finance also revealed that the government spent $1,983.16Bn (Shs7.536Trn), as of 31st December 2023 on servicing Uganda’s public debt, which is a 10% increase from $1,775.44Bn (Shs6.747Trn) as at 31st December 2022.

The report highlighted, “The total external debt service paid between 1st July 2023 to 31st December 2023 amounted to US$544.82 million (Shs2.070Trn) of which US$334.46 million (Shs1.271Trn) , was for principal payments, US$203.79 million (Shs774.501Bn) for interest payments and US$ 6.56 million (Shs24.931Bn) paid as charges/commissions.”

“The total Domestic Debt Service paid between 1st July 2023 and 31st December 2023 amounted to Shs5.440Trn, of which Shs.3.225Trn was for principal payments and Shs.2.216Trn for interest payments. Out of this total domestic debt service, Shs.1.095Trn was arrears for the second half of FY 2022/23,” as noted in the report.

The report further indicated that the total amount of loans disbursed as at 31st December 2023 was $378.82 Million (Shs 1.433Trn). During the FY 2023/24, Integrated Transport Infrastructure and Services accounted for US$ 171.04 Million (Shs 647.121Bn), Sustainable Urbanization and Housing US$73.05 Million (Shs276.381Bn), and Sustainable Energy Development USD 54.7 Million (Shs206.954Bn) had the highest amount disbursed than the rest of the programmes.