Parliament. The rate at which Uganda is borrowing is worrying, the Auditor General has said.
Handing over the 2018 report to Speaker of Parliament Rebecca Kadaga yesterday, Mr John Muwanga announced that the public debt has increased by 22 per cent from Shs33.99 trillion as of June 30, 2017 to Shs41.51 trillion on June 30, 2018.
Although Mr Muwanga pointedout that Uganda’s current debt Gross Domestic Product (GDP) ratio stands at 41 per cent, which is still below the “IMF risky threshold of 50 per cent,” and compares well with other East African countries, he warned that the figure is unfavourable when debt payment is compared to the country’s revenue collection.
The AG expressed concerns that more than a half of the loans sampled totaling to Shs3.98 trillion will expire in 2020 and that, if government is to service the loans as projected in the next two financial years (2018/2019 and 2019/2020), it would require more than 65 per cent of the total revenue collections, a figure that is “over and above the historical sustainability levels of 40 per cent.”
Although absorption of external debt has improved compared to last financial year (2017/18), Mr Muwanga said some loans have absorption levels of 10 per cent and below.
He raised the red flag on the ground that significant value loans have stringent conditions which could have adverse effects on Uganda’s ability to sustain its debt.
“These conditions include: waiver of sovereign immunity by government over all its properties and itself from enforcement of any form of judgment, adoption of foreign laws in any proceedings to enforce agreements, requiring government to pay all legal fees and insurance premiums on behalf of the creditor,” the report reads in pasrt.
Ms Keto Nyapendi Kayemba, the assistant AG, said the public debt may soon run out of hand.
By Daily Monitor