Ugandan taxpayers will have to pay US$900 million (UShs3.3 trillion) per year between FY2022/23-2025/26 to service external debt.
The revelation was made by Michael Atingi-Ego, the Deputy Governor, Bank of Uganda when he appeared before the Parliamentary Committee on Finance, Planning and Economic Development to discuss the economic performance and outlook on Tuesday January 10, 2023.
Atingi-Ego says public debt service continues to exert pressure on domestic revenues.
“Total debt service (domestic & external) as a percentage of domestic revenues averaged 37% in the first four months of FY2022/23. Moreover, external debt service, which is projected to average about US$900 million (Shs3.3 trillion) per year between FY2022/23-2025/26, remains a significant strain on international reserves,” Atingi-Ego told MPs.
According to BoU, as at end-November 2022, total public debt stock increased to Shs79.77 trillion (approximately 49.1% of GDP), up from Shs73.22 trillion as at end-November 2021.
“The increase was due to a 5.2% increase in external debt and a 14.9% increase in domestic debt. External debt maintained the dominant share of 60.4% of the total public debt. Public debt to GDP ratio is projected to rise further in the medium term, peaking at about 53% before gradually declining to the Government target of 50% by the end of FY2024/25,” Atingi-Ego said.
BoU adds that most risk indicators were within the 2018 Public Debt Management Framework (PDMF) thresholds.
“The annual time to maturity (ATM) for domestic debt increased to 6.5 years in November 2022 from 5.7 years in November 2021, and 4.9 years in November 2020. This is consistent with the government’s strategy to lengthen the maturity structure of the domestic debt to subdue refinancing risks. The share of debt maturing in one year improved from 28.3% in November 2021 to 24.5% in November 2022,” BoU says.
