Uganda’s debt portfolio and persistent willingness to borrow has become a major source of concern, with the government and parliament justifying the continued borrowing while experts warn it is time to pump the brakes.
In the month of November alone, the government requested permission from parliament to authorize four different loans.
On these,shs 3.5 trillion was for budget support, Shs 1.9 trillion for budget support as well, shs 525 billion towards funding Digital Acceleration and the latest of shs 155 billion to finance Electricity Access.
But as many of these loans requests continue to flow, so are the concerns of Uganda’s soaring debt and crisis ahead.
The debt question has become a ping pong game with government assurance that Uganda still has its debt in check while the economists insist it is time to pump the breaks.
Economist Patrick Katabaazi told Nile Post that government is trying to keep the economy humming but the red flag is in plain sight.
The shs 25 trillion tax to GDP ratio of the shs 48 trillion budget means Uganda is spending beyond its means.
Already, there’s a the 8- 12 trillion debt rollover pending clearance, that eats into the shs 48 trillion budget.
The shift from concessional to short term loans means the country will be required to pay higher interest on borrowed funds.
Debt sustainability and the declining fiscal space currently standing at 49% of the 50% approved by law.
“We may not have reached the danger zone but it’s right there, we are now borrowing to consume,” Katabaazi said.
Katabaazi says unlike the previous times where Uganda’s debt has been pardoned, the structure of the current loans is conditioning.
“Remember that these are commercial / private entities. We have to pay,” he said.
All eyes too are on parliament, whether the legislators are doing enough to put checks in place.
Katabaazi thinks that Parliament has had limited time to look through these loans, “Many times there is a conflict of interest in these approvals processes..”
Otuke county MP Paul Omara, however, told this website in an interview that parliament remains vigilant. He insisted that concern should on sustainability and absorption.
The country’s public debt stands at Shs 69.5 trillion ($19.54 billion). Of this, domestic and external debt is Shs 25.4 trillion ($7.2 billion) and Shs 44 trillion ($12.4 billion). The public debt is projected to increase by the end of this financial year and the end of the financial year 2022/2023.