Uganda debt burden approaching the point of no return, economists warn

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Uganda debt burden approaching the point of no return, economists warn
Dr. Fred Muhumuza

Economists have warned that Uganda's debt could be approaching the point of no return. This follows findings by the Attorney General that Uganda's debt burden clocked over UGX 96tn in FY 2022/23.

The Auditor General’s latest report to Parliament, highlighted that Uganda’s outstanding debt comprises of an external debt stock of UGX 52.472 trillion and a domestic debt of UGX 43.696 trillion. This represents a UGX 9.33tn rise in the total debt within a single financial year.

"The rate at which Uganda is borrowing is worrying, surpassing the growth rate of the GDP," the Auditor General warns.

According to Dr. Fred Muhumuza, a senior Economist, Uganda will soon be forced into a vicious cycle of borrowing more money to clear existing debt.

“At the moment we have no capacity to meet creditors’ needs. The revenues collected by the Uganda Revenue Authority are not not enough to service the loans, pay debts, salaries and wages that account for about 50-60% of the national budget.”

Muhumuza blames the situation on failed systems and poor prioritisation on the part of government.

“We need to break up systems that are no longer working, and restructure inefficient government entities if the country is to get out of this debt burden,” he says.

Minister Kabbyanga says the debt is still manageable

However, State minister of National Guidance, Godfrey Kabbyanga, insists that the country's debt burden is still manageable, with a few strategic interventions.

“We have to minimise on consumptive administration and put resources into productive and infrastructure sectors. This has to be done through fighting corruption,” Kabbyanga argues.

 

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