{UAH} Who lends money to Uganda?

After months of brushing off concerns about the growing national debt, Finance minister Matia Kasaija yesterday said government will seek to reschedule payments, on the day this newspaper revealed each Ugandan now owes Shs1.5 million.

 In an interview with Reuters news agency, Mr Kasaija revealed that repayments of the debt, now at $17.96 billion (Shs66 trillion) if domestic debt is included, might have to be renegotiated with major creditors, including China and the World Bank.
 "I will approach them. I will not hesitate to approach them and say,  'you guys can we suspend servicing these loans for, say, maybe two years?" Reuters quoted him as saying. 

On Friday, Mr Kasaija also expressed frustration with the high levels of borrowing but claimed he was powerless to stop it. 
"I am not a fan of borrowing," he said, "but the current situation has made it difficult to survive without borrowing."
 The current national debt represents 47.2 per cent of the Gross Domestic Product, the measure of all economic output in the economy in a given year, and is close to the 50 per cent level that some experts believe is a borrowing ceiling. 

Last year alone, Uganda borrowed more than Shs15 trillion, the single largest borrowing in a year, owing to the Covid-19 pandemic and reduced tax revenues. Uganda was the first country to benefit from the Heavily-Indebted Poor Countries (HIPC) initiative, which offered a number of low-income countries an opportunity to negotiate a reduction of their external debt. 

In 1998, the country received $650m in debt relief from its external creditors following reforms demanded by the World Bank and the International Monetary Fund (IMF). 
In the early 2000s, another $1.3 billion was written off to allow the country to use its resources to reduce poverty. 
However, the debt relief created room for a new borrowing spree, officially for infrastructure investments but many projects have been riddled with corruption or missed deadlines and come in above budget. 

The Civil Society Budget Advocacy Group (CSBAG), an advocacy group, says the rising debt level is becoming unsustainable. 
"We are right to be concerned about our growing debt levels and we should focus on whether we can repay our obligations without unduly hurting our development ambitions and are we borrowing for the right reasons?" it said in a statement. 
"We note that under-absorption of loans has led to an increase in the cost of loans hence leading to low returns on public investments," the civil society organisations noted. 

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"When a man is stung by a bee, he doesn't set off to destroy all beehives"

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