BoU says Uganda’s public debt is sustainable
Uganda’s public debt in nominal value stood at Shs79.938 trillion (approximately 49 % of GDP) in October 2022, the Bank of Uganda (BoU) has said in its recently released State of the Economy Report for December 2022.
“Public debt remains sustainable. Public debt as a ratio to GDP is projected to rise further in the medium term and peak at about 53 percent before gradually easing and returning to the Government target of 50 percent by the end of FY2024/25,” the report says.
However, the report adds that public debt servicing continues to exert pressure on domestic revenues.
Total debt service (domestic & external) as a percentage of domestic revenues averaged 37 percent in the first four months of FY2022/23.
“Although most all debt risk indicators were within the 2018 PDMF ( Public Debt Management Framework) thresholds, domestic debt interest payments continued to be in breach, reflecting liquidity pressures on the domestic revenues to finance the domestic debt liabilities at the expense of other priority budgetary items. Moreover, external debt serving which is projected to average US$ 1.3 billion per year between FY2022/23-2025/26 remains a major strain on international reserves,” BoU’s report obtained by Business Focus, says.
It adds that the Average time to Maturity (ATM) for domestic debt was above target at 6.7 years in October 2022, up from 4.6 in October 2020.
“This is consistent with Government’s strategy to lengthen the maturity structure of domestic debt portfolio to minimize refinancing risks. The share of debt maturing in one year declined from 28.2 percent in October 2021 to 24.4 percent in October 2022,” the report says.
