{UAH} ‘Uganda’s growing debt unsustainable’ and Farouk et al sing NRM Oyeeeeee!
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Finance Minister Maria Kiwanuka displays the 2012/13 National Budget at Parliament in July. FILE PHOTO
Kampala.
Uganda's external and domestic debt is growing by close to 2 percentage points of the Gross Domestic Product every year, the Finance ministry has said.
The continuous upward growth in Uganda's public debt could see the country falling into unsustainable debt burden in the long-run.
Uganda once had unsustainable external debt burden of $5.5 billion (Shs14.257 trillion) in the early and mid-2000s which led to the outflow of foreign exchange inform of debt servicing.
Mr Martin Nsubuga, a senior economist in macroeconomic policy department in the ministry of Finance told the Sunday Monitor recently that Uganda's public debt is growing at close to 2 percentage points every year.
"This growth rate will see Uganda's public debt constituting 39 per cent of the GDP in the medium-term (2017)," he said.
Mr Nsubuga said the ministry of Finance report on loans, grants and guarantees 2012/13 which was presented to Parliament by Finance minister Maria Kiwanuka in June, indicates that Uganda's external debt exposure was $5.80 billion (about Shs15 trillion), up from $2.4 billion ( about Shs6 trillion) as end of the financial year 2006/2007.
"More than 70 per cent of this borrowing has been primarily used for financing infrastructure and social service developments required to enhance productivity and to fight poverty respectively, while the remainder was used for general budget support," reads the report in part.
On the domestic scene, the report says it is estimated that as of end of June 2013, the total stock of outstanding government securities will be Shs6.045 trillion, which is the sum of the total value of outstanding securities.
Favourable debt
While launching Uganda's updated economic report by the World Bank recently, the Prime Minister Amama Mbabazi, however, said: "Uganda has a favourable debt situation, with our total debt, including external and domestic debt, is now about $6 billion (about Shs12.7 trillion). This is only about 29 per cent of GDP."
On the international reserve, he said Uganda's international reserves now stands at about at $3 billion (about Shs6.7 trillion) which is equivalent to about 4.1 months of future imports of goods and services.
About the external debt sustainability, the director research Bank of Uganda, Dr Adam Mugume, says Uganda's debt is still sustainable meaning that the country is free of debt distress position.
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