Uganda’s national debt has grown to 24.60 Billion dollars (93.38 Trillion shillings), according to latest report by the Ministry of Finance, Planning and Economic Development for the period up the December 2023.
This is an increase from 23.66 that was recorded at the end of last financial year (June 2023).
This resulted in the debt to GDP ratio reducing from 48.4 to 46.9 percent, because of the expansion of the economy, rather than reduction in debt stock.
Of this, external public debt accounted for 14.64 Billion dollars (55.37 Trillion shillings) while domestic debt was 9.96 Billion (38.01 trillion), according to the public debt sustainability analysis conducted in December.
Finance Minister Matia Kasaija says more borrowing is necessary to fund the budget, though it needs to be prudent.
“Government of Uganda’s public financing is guided by the principle of prudent current national and global challenges that have necessitated increased borrowing to finance the Budget for the year 2023/24.
Despite the above, Government is still committed to contracting of more external concessional financing and less of domestic and commercial debt,” says the minister.
However, with the increasing cost of debt (servicing) relative to the domestic revenue, which, by law, us supposed to service and repay the debt, the ministry admits is a cause of concern.
The ratio of total debt service to domestic revenue amounted to 32.6 percent in Financial Year 2022/23 and thus debt service burden still remains a key area of concern for debt sustainability, according to the minister.
By the end of December 2023, total public debt service amounted to 1.983 billion dollars, of which 59.9 percent was in principal repayments, 39.8 percent interest service payment and 0.3 payment of commissions and charges.
It means 1.1878 billion dollars or about 4.5 trillion shillings want towards clearing the debt.
Similarly, new loans equivalent to 1.563 were approved by Parliament and signed, showing that more loan values are being acquired than what is being paid back, hence the increase in the debt stock.
For this financial year the parliament passed a total budget amounting to 52.737 trillion shillings and the total external financing for the first half amounted to 1.415 trillion against the target of 3.846 trillion.
According to the ministry, the shortfall was mainly attributed to the lower-than-expected disbursements under projects and programs, delayed commencement of some major infrastructure projects and lower Budget Support disbursements.
On the domestic scene, half year net domestic financing amounted to 3.162 trillion against the target 1.341 trillion shillings.
The difference was attributed to Government’s “need to cover the financing gap that resulted from delayed mobilization of external budget support as well as low domestic revenue performance,” the report says.
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