Uganda’s debt burden has grown by 13.7 percent over the past nine months which has put the country’s total debt stock at more than Shs 53.6 trillion.
According to the governor, Bank of Uganda, Prof. Tumusiime Mutebile, the new figures are representative of the total increase recorded between July 2019 and April 2020.
The Central Bank figures show that the ratio of debt as a percentage of GDP stood at 13.9% in nominal value terms as at the end of April 2020 and 29.7% percent in present value terms as at the end of March 2020.
Mutebile told MPs on Parliament’s Committee on National Economy that the latest loans that the government has acquired to respond to the COVID-19 crisis could further push up the ratios partly due to slow growth, exchange rate depreciation, weaker exports and a fragile domestic revenue base.
He said Uganda is faced with unprecedented challenges from the health, macroeconomics and social effects of Covid-19, and to limit the harm of the pandemic on the economy, it is important to maintain macroeconomic stability, secure core public services, and maintain the private sector since it will allow a quicker return to business creation and sustainable development after the pandemic passed.
“Given the rise in debt, there is a growing concern of risk to debt distress. Indeed, Uganda’s debt service has surpassed the threshold level in FY2019/2020 and it is projected to remain high in FY2020/2021. This could be an early indication for fiscal risk could lead to high levels of debt distress,” Mutebile said.
Aston Kajara (Mwenge South) asked whether Uganda could seek debt relief from its lenders or postpone debt servicing for two years.
“We have in the pipeline a number of loans, we are borrowing up to our bone marrow and this is against falling domestic revenue, slow execution of infrastructure projects. The debt stock which we have could take 94 years with each person paying Shs1 million,” Kajara said, adding that, “With this situation where we have exorbitant public expenditure, I want to know to comment on public expenditure management especially post COVID-19. Do you advise we seek debt relief or postponement of debt service for at least two years.”