Uganda has maintained it will continue to service its debt despite concerns by experts over a possible default risk, Chimp Corps report.
State Minister of Finance, Amos Lugoloobi said Uganda’s public debt surged to US$ 17.96 billion as at 31st December 2020, equivalent to 49.8% of GDP.
Borrowed funds, according to Lugoloobi, have been used to finance mainly infrastructure projects such as the Karuma and Isimba hydropower plants, oil roads, development of airports industrial parks, transmission lines, water and irrigation projects.
“Uganda public debt remains sustainable in the short, medium and long term,” said Lugoloobi.
“I reaffirm Government’s unwavering commitment that Uganda shall continue to honour its debt obligations as they fall due,” said Lugoloobi during the budget reading this Thursday afternoon.
“Uganda will not default on repayment of its debt. All contractual debt obligations will be fully honoured.”
The impact of the COVID-19 on the economy and shrinking tax collections have fuelled fresh borrowing from IMF and World Bank.
External creditors hold two thirds of the country’s debt.
Lugoloobi said Government will undertake several measures to keep the debt within sustainable levels.
These include ensuring projects are well appraised to allow only those that are viable and aligned to the national development plan and prioritising borrowing for only projects that enhance socio-economic transformation, and enhance project implementation.
Lugoloobi said Uganda will be borrowing from concessional sources and increase the maturity profile of our domestic debt.
The Resource Envelope for Financial Year 2021/22 amounts to Shs. 44,778.8 billion.
Domestic Revenue amounts to Shs 22,425 billion of which Shs. 20,837 billion will be tax revenue and Shs 1,588 billion will be Non-Tax Revenue.
Domestic borrowing amounts to Shs 2,943 billion. The Petroleum Fund resource amounts to Shs 200 billion.
Lugoloobi said Budget Support accounts for Shs 3,583 billion while External financing for projects amounts to Shs. 6,868 billion of which Shs. 5,519 billion is from loans, and Shs. 1,349.4 billion is from grants.
Appropriation in Aid, collected by Local Governments amounts to Shs.212.4 billion; and Domestic Debt Refinancing will amount to Shs 8,547 billion.
The total expenditure will be Shs.44.778.8 billion. Excluding domestic debt refinancing and Appropriations in Aid (AIA), it amounts to Shs. 36,019.4 billion of which Wages and Salaries is Shs. 5,528.6 billion, Non-wage Recurrent Expenditure is Shs. 15,625.4 billion and Development Expenditure is Shs. 14,865.3 billion.