The Ministry of Finance, Planning and Economic Development has admitted that loans to a tune of US$4.81Bn equivalent to Shs18.041Trn lay idle and undisbursed as at end of December 2022.
The Ministry’s admission is contained in the Report on Public Debt, Grants, Guarantees and Other Liabilities for 2022/2023 published in March 2023 and only made public in May 2023.
The report read, “As of 31st December 2022, the undisbursed debt stock stood at US$4.81Bn compared to US$5.55Bn (Shs20.817Trn) as of 31st December 2021. This represents a decrease
in the undisbursed debt stock of 13.3 percent. World Bank, International Monetary Fund, African Development Bank, International Development Bank and China hold the largest share of undisbursed debt stock at 29 percent, 16 percent, 14 percent, 10 percent and 10 percent respectively.”
The Ministry of Finance attributed the decrease in the undisbursed debt stock to the easing of the lock-down and full re-opening of the economy, noting further in the report, “Implementation
of the projects is further expected to pick up pace and we expect further reduction in the undisbursed balances because of enhanced field visits and the quarterly portfolio reviews being conducted by the Ministry of Finance, Planning and Economic
Development.”
The report also noted that although at the time of authoring the report, Uganda’s stock of public debt stood at US$ 20.99Bn, equivalent to Shs78.833Trn in FY2021/, Government only paid US$360.83 million (Shs1.353Trn) in external debt service between 1st July 2022 and 31st December 2022, out of US$12.82Bn (Shs48.171Bn) of the total external debt composition it owed its lenders.
According to the Ministry of Finance, of the total debt repayment to external lenders, US$ 254.41 million (Shs954.667Bn) was for principal payments, US$96.54 million (Shs362.121Bn) for interest payments and US$9.88 million (Shs37.059Bn) paid as charges.
It’s worth to note that Commissions comprise of commitment fees, upfront fees and management fees. Commitment fees are charged on the undisbursed loan amounts, and these are usually paid per annum.
The Ministry of Finance in its analysis of Uganda’s debt alluded to debt remaining sustainable in the medium to long term, but expressed fears over money being set aside in the national budget to pay off public debt.
The report noted, “However, debt service still remains a key area of concern for debt sustainability. The ratio of total debt service to domestic revenue continued on an upward trend
increasing to 30.6 percent in FY2021/22 and is projected to increase further in
FY2022/23. This implies that debt service is increasingly taking up bigger share of resources, hence constraining the allocations to other areas of the budget.”
