Uganda’s total public debt stock (in nominal value) stood at Shs56.5 trillion (40.9 percent of GDP), as at end June 2020, the Bank of Uganda (BoU) Annual Report for Financial Year 2019/2020 released on October21 has revealed.
This represents an increase of 19.6 percent relative to June 2019.
“The increase in the stock of total public debt between June 2019 and June 2020 was mainly due to a UGX 6,362.1 billion increase in external debt largely attributed to borrowings from the IMF, Trade and Development Bank (TDB), and Stanbic Bank towards countering the economic distress brought about by the COVID-19 pandemic,” the report obtained by Business Focus reveals.
It adds: “Public external debt continued to maintain the dominant share of 66.2 percent of the total public debt. External and domestic debt increased by 20.5 percent and 18.0 percent, respectively in FY 2019/20. External debt made up the bulk of the total public debt, accounting for 66.2 percent.”
Despite the increase in borrowing, the report says: “Uganda’s debt levels remain sustainable with low risk of debt distress; however, significant vulnerabilities are evident.”
It adds that although the multilateral creditors have put in place facilities to dampen the adverse effects of the COVID-19 pandemic, uncertainties relating to the ensuing expenditure pressures, subdued economic activity and declining tax revenues, and a possible further decline in grants could lead to further borrowing on non-concessional terms.
“The associated increase in interest payments will be a substantial drain on resources that could have otherwise been used to finance development. Indeed, debt service constitutes about 27 percent of tax revenue,” the report says.