The Ministry of Finance, Planning and Economic Development has revealed plans to spend Shs6.135Trn on interest payment for the loans acquired by Government to finance its national budget, an amount that is equivalent to 2.9% of Uganda’s GDP.
According to the National Budget Framework Paper for FY 2023/24, of the money to be spent, Shs5.227Trn is projected for domestic interest payments while the remaining amount equivalent to Shs907.9 billion will be foreign interest payments and commitment fees and the trend is likely to continue like this in the coming years with interest payments likely to average 2.3% of Uganda’s GDP.
The stock of public debt increased from US$19.54 billion in June 2O21 to US$ 20.99 billion about Shs76.348Trn in June 2022, although latest figures indicate the public debt has hit the Shs80Trn mark.
And despite the growing public debt, Government intends to hit the foreign market with intentions to borrow a total of Shs8.343Trn projected as external financing in FY2023/24, and of this, Shs2.452Trn will be obtained as budget financing loans and Shs5.891Trn from project loans. Government also intends to hit the domestic market by borrowing for fiscal purposes in FY2023/24 seeking loans from commercial banks to a tune of Shs1.585Trn compared to Shs5.007Trn Government intends to borrow in the current FY2022/23. The Ministry of Finance defended plans to reduce lending from local commercial banks on the latest Government’s policy decision to maintain domestic borrowing in order to avoid crowding out of the private sector.
