Auditor General John Muwanga says that Uganda’s high cost of borrowing may deny future generations the opportunity to sustainably borrow. A recent International Monetary Fund- IMF report raised a red flag at Uganda's rate of borrowing, and Uthe country’s credit rating outlook was revised from stable to negative,” reads the audit report.
According to the report, 17 loan request proposals authorizing government to borrow were approved. These were tabled by government through the Ministry of Finance, Planning and Economic Development and considered by the House National Economy Committee.
According to the Vice-chairperson of the committee Lawrence Bategeka, although loan disbursement performance has been improving over time, a significant amount of committed external debt amounting to 18 trillion shillings remains undisbursed.
According to the Auditor General John Muwanga’s report for the financial year ended June 2019 payables rose by 29 percent to Shillings 3.3 trillion. As of end of June 2019, the stock of public debt amounted to 46.36 trillion Shillings (USD 12.55 billion). Of this, the external debt was 30.85 trillion Shillings (USD 8.35 billion). The domestic debt was 15.51 trillion Shillings (USD 4.2 billion).
As at end of June 2019, the stock of public debt amounted to 46.36 trillion Shillings (USD 12.55 billion). Of this, the external debt was 30.85 trillion Shillings (USD 8.35 billion). The domestic debt was 15.51 trillion Shillings (USD 4.2 billion).
The Leader of Opposition Betty Aol Ocan argues that government is at the verge of failing to pay its domestic debt and that borrowing being undertaken on highly competitive rates as compared to external loans.
Some of the areas include medium scale Irrigation schemes in Kabarole, Oyam, Kween, Nebbi, Butaleja, and Omoro. Others are small scale Irrigation schemes Arua, Ntoroko, Ibanda, Dokolo, Butambala, Gomba, Rukungiri,Kisoro,Kaabong, Napak,Manafwa among others.
In its report to parliament accessed by Uganda Radio Network on the Finance Sector budget for the coming financial year, the Finance Committee chaired by Rubanda East MP, Henry Musasizi asked government to maintain a high degree of debt sustainability.
According to the Budget Framework Paper, whereas the budget has increased by 4.9 percent from 32.7 trillion shillings to 34.3 trillion shillings, a lion-share of the resources in the envelop are for debt repayment, interest payment and non-resource funds for domestic debt refinancing.
The Auditor General John Muwanga said that the government would require more than 65 percent of the total revenue collections to service loans as projected in the next financial year 2019/2020.
Bahati explained that a greater share of the countrys outstanding debt is sourced from multilateral creditors like World Bank, African Development Bank and the Islamic Development Bank.
Parliaments National Economy Committee has warned of Ugandas ever growing public debt that currently stands at 34.4 trillion Shillings, a figure equivalent to 38 percent of Gross Domestic Product GDP as at June 2017.
According to finance minister Matia Kasaija, the debt is sustainable over the medium to long term. But Adam Mugume, the executive director for research at Bank of Uganda disagrees with the assertion and says that continued borrowing will further affect the economy which has already slackened.
Finance minister Maria Kiwanuka says this is in line with the recommendation by Bank of Uganda (BOU) and the International Monetary Fund (IMF) for the government to cut back on borrowing from the domestic market. The IMF has particularly been very critical of Uganda government borrowing more money, instead of finding options to increase tax revenues.
