The Ministry of Finance, Planning and Economic Development has revealed that Government is yet to disburse loans to a tune of Shs11Trn to the various projects the money was borrowed against, despite the fact that the idle loans are attracting interest from the various lenders.
The details are contained in the Final September 2023 Debt Statistical Bulletin that was recently issued by the Ministry of Finance which indicated that undisbursed debt reduced from US$3.13Bn (Shs11.850Trn) as at June 2023 to US$2.99Bn (Shs11.321Trn) by end of September 2023.
According to the Ministry of Finance, both multilateral and Bilateral creditors during the quarter registered a reduction in the undisbursed amounts from US$2.29Bn and US$0.82Bn to US$2.22Bn and US$0.74Bn respectively.
“The decreasing trend of undisbursed external over the quarter is attributed to deliberate efforts by Government to ensure projects’ readiness for financing which results into timely project execution and disbursements,” read in part the report.
The Ministry of Finance also revealed that between July -September 2023, Government spent Shs1.118Trn on debt servicing.
According to the report, the period which is also known as Quarter one of FY2023/24, registered an increase in total external debt service of US$295.49M (Shs1.118Trn) from US$175M (Shs662.555Bn) that the Ministry of Finance spent on the similar expenditure in the previous quarter (March-June 2023).
“This was on account of increased principal and interest payments and interest payments for projects like Karuma and Isimba and repayments for AFREXIM and Trade Development Bank for budget financing,” read in part the report.
Government says that the stock of public debt increased from US$ 20.99 billion (Shs78.833Trn) in June 2022 to US$ 23.66 billion (Shs86.779Trn in June 2023, with Government blaming the growth in public debt on the continued economic growth recovery from the COVID-19 shock which had not only affected economic activity, but also necessitated higher Government borrowing; coupled with Government’s deliberate efforts towards fiscal consolidation. Government has since been borrowing and expects to borrow Shs13 trillion in FY 2024/25.
