By Frank Kamuntu
HE Yoweri Kaguta Museveni is no way different from his bazzukulu who are worried of Uganda’s ballooning debt.
After giving his budget speech on 15th June 2023, Museveni rushed to his twitter handle and expressed worry that of the Ugx52trillion budget, a huge chunk of Ugx17trillion will go to debt servicing.
”You heard your budget of Ugx52trillion. While I support that budget because there is no other solution in the short-run, it is important to know that Ugx17trillion of that budget, is to pay debts,” noted Museveni.
”Many of these debts, were being pushed by the neo-colonial public servants, until recently when I put down my foot and insisted on approving every loan.”
Museveni therefore says the way forward is that his government should borrow less or not borrow at all.
”With discipline, we do not have to borrow at all,” says Museveni.
According to the Budget Framework Paper, the stock of public debt increased from US Dollars 19.54 billion in June 2021 to US Dollars 20.99 billion in June 2022. As a share of GDP, public debt increased from 46.90 percent to 48.4 percent over the same period.
This represented an increase of 7.4 percent compared to 27.45 percent in the previous financial year. This, the paper notes, is a result of the government’s deliberate policy of fiscal consolidation aimed at ensuring that debt remains within the set threshold of 50 percent of GDP in the medium term.
Although the paper notes that the debt will level off to below 50 percent in the financial year 2025/2026, nonetheless economists and politicians alike have already raised red flags.
In November last year, the Deputy Governor of the Bank of Uganda, Micheal Atingi-Ego told parliament’s Finance Committee that the country’s public debt had hit 80 trillion Shillings as at end of September 2022, which was then approximately 50 percent of GDP.
Atingi-Ego said that Uganda’s debt servicing in the current financial year 2022/2023 is at a ratio of tax revenue estimated at 30 percent and this suggests that any further borrowing with associated servicing in the short to medium term would constrain government development efforts.
“Failure to resist expenditure pressures amidst rising debt servicing costs and failure to revamp growth remains the most significant risks to debt distress.”
”Outlook to debt sustainability is dependent on the government’s commitment to the fiscal consolidation path and the evolution of global, domestic financial conditions and the growth of the economy,” Atingi-Ego said.
