The Minister of Finance Planning and Economic Development, Matia Kasaijja has said Uganda’s current debt is suitable given the average maturity rate of over 35 years and a grace period of not less than six years coupled with relatively low interest rate of less than 1.5 per cent every annually.
Last week, the Auditor General, John Muwanga table a report that indicated that the country’s domestic debt is at the cliff of swallowing Uganda’s total revenue collection. Currently, Uganda’s total debt stock (domestic and external) acquired from multilateral creditors and local creditors mounted US $10.7 billion (Shs41, 326.1 trillion).
According to Auditor general’s report of 2018, 50 per cent of the loans sampled totaling Shs39 trillion will expire in 2020 and if government is to service the loans as projected in the next financial years, it would require more than 65 per cent of the total revenue collections.
Apparently, the highest percentage of the budget for financial year 2018/2019 and that is about Shs10 trillion goes to loan servicing.
Speaking at Media centre, Mr Kasaijja said Ugandans should not worry of the country’s debt saying it is sustainable with nominal debt GDP of 41.4 per cent consistent with auditor general’s reports.
He said various loans have been acquired form different creditors to build flagship projects such as Isimba and Karuma Power dams, Kabaale airport, and Entebbe express highway among others.
“Government will continue to be cautious on taking new projects after the implementation of previous ones, continue investing in export- oriented areas to boost on country’s exports to increase on the forex inflow and servicing of forex denominated debt,” he said.
He said government moves on to enhance domestic revenue efforts through addressing through comprehensive domestic revenue strategy, peddled at raising revenue to the GDP ratio by 0.5 per cent annually.
“I would like to assure the country that our debt is sustainable and is projected to be sustainable in the medium long term. The debt levels are comfortably below operational threshold (50 per cent debt to GDP) and are subsequently below sub-Saharan average (45.5 per cent debt to GDP).
“All debt payments are programmed and prioritized to ensure that they are paid as and when it falls due. The risk of government defaulting on debt payment is nonexistent in the budgetary cycle and it should not be of concern,” said Mr. Kasaija.