Uganda’s Minister of Finance, Planning and Economic Development Matia Kasaija (pictured) has revealed that total public debt as at December 2019 amounted to United States Dollars 13.3 Billion (Shs49.6 trillion), with external debt accounting for United States Dollars 8.59 Billion (Shs32.06 trillion)or 64.4 percent while domestic debt amounted to United States Dollars 4.74 Billion (Shs17.6 trillion)or 35.6 percent of total debt stock.
The Minister made the revelation while delivering the 2020/21 budget speech at the fifth and final session of the 10th Parliament under the theme: ‘Stimulating the economy to safeguard livelihoods, jobs, business and industrial recovery’.
“Government’s approach to public debt financing is elaborated in the Medium Term Debt Strategy for the five- year period commencing next financial year. The Strategy seeks to contract only affordable external debt in preference to domestic debt. The approach to reduce domestic debt in preference to external debt is intended to lower the cost of interest payments to 2.2 percent of GDP compared to 2.6 percent of GDP, if we were to continue borrowing significantly from domestic sources,” Kasaija said.
He noted that to ensure that public debt remains sustainable, Government will implement the Domestic Revenue Mobilization Strategy to increase Government’s capacity to finance programs with less reliance on domestic and external borrowing.
“In response to the Corona Virus crisis, Government has commenced negotiations with some creditors for debt relief. This will free resources to finance interventions in the fight against the pandemic,” Kasaija said.
The Resource Envelope and Allocations for Financial Year 2020/21 totals Shs45.493Trn of which Domestic Resources amount to Shs25.585Trn and of this, Domestic Financing amounts to Shs3.560Trn while External Financing consists of Project Support of Shs9.515Trn and General Budget Support Shs2.906Trn.
Despite the escalating debt, the Minister assured Ugandans that Uganda’s economic outlook is positive, adding that Corona Virus pandemic has helped the Executive to once again demonstrate the economic capacity and the vast opportunities that our country has.
“The budget for Financial Year 2020/21 will support the economy to fully recover, harness the potential that we have, and get back to our progressive journey of double-digit GDP growth rate. The focus of the budget for the next financial year places emphasis on supporting livelihoods and the recovery of business enterprises, without losing focus on our long-term development initiatives. To this end, the Government will support the private sector to scale up production, sustain and increase employment,” said Kasaija.
