This archive report was first published on 11 November 2019.
Uganda's public debt has risen to $12.2 billion as of June this year, according to Ministry of Finance data, from about $9.4 billion in 2017.
Published on November 11, 2019, the rapid accumulation of debt has raised repayment concerns, with government economists walking a fine line between defiance and caution.
Analysts warn of serious financial risks tied to new borrowing, citing the bulk of the loans are intended to finance big infrastructure projects in the transport and energy sectors.
As of 2019, the national debt has risen to 42% of annual economic output, up from 37% in 2017.
Interest payments on debt have increased from Ush9.9 trillion ($2.6 billion) in 2016/17 to Ush12.3 trillion ($3.3 billion) by end of 2018/19.
Despite a revenue surplus of Ush258.89 billion ($69.3 million) recorded in 2018/19, the taxman posted revenue collection deficits for three preceding years, a sign of harsh economic conditions.
Government economists insist that bigger investments in infrastructure remain a prudent economic choice, but also concede to hidden risks connected to surging public debt levels.
“Our debt-to-GDP ratio remains below the 50 per cent ceiling after the latest economic rebasing. However, we are borrowing for new infrastructure projects which will eventually translate into higher economic growth except in cases where projects are poorly executed,” said Albert Musisi, Commissioner for Macroeconomic Policy at the Ministry of Finance, Planning and Economic Development.
However, some experts warn that public debt sustainability faces significant downside risks from the government’s ambitious push for infrastructure development, exchange rate volatility, and rising refinancing risks.
