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External Borrowing To Form 81% Of Uganda’s Project Financing In 2018

Uganda’s public debt is set to skyrocket in Financial Year 2018/19 considering that Government plans to borrow trillions of Shillings both internally and externally.

A Report of the Budget Committee on the National Budget Framework Paper for 2018/19 obtained by Business Focus says that external debt constitutes 66 percent of total public debt of US$10.74Billion projected for FY 2017/18. “In FY 2O18/19, the mode of financing projects in the country will largely (81%) be through external borrowing, while 19% will be through grants in FY 2018/19,” the report reads in part.

It adds: “Among the external borrowings for projects, only 47% of the financing will be on concessional or cheaper terms. The remaining funds (53%) will be obtained on more expensive terms and the share will increase in the medium term to average at 79%.”

It adds that Government will access more expensive external credit to finance its investment plan in the medium term.

“Uganda faces heightened risks to this approach of external financing given that the PV of external debt to exports of goods and services may worsen from 77.5% in FY 2016/17 to peak at 112.7% in FY 2021/22, increasing the vulnerability of the country’s external position in event of any export shock,” the report says.

According to the Budget Framework Paper, domestic borrowing (through issuance of securities by the government) will contribute about Shs940bn, down from Shs954bn in 2017/18, while project support (external financing) will contribute Shs6.7trillion, slightly down from Shs7trillion in 2017/18.

Taddewo William Senyonyi
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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