National debt rises to $5.6 billion

By  YASIIN MUGERWA
Posted  Friday, March 1  2013 at  02:00

Latest figures released yesterday show that the country’s external debt burden has risen to $5.6b (more than Shs14.3 trillion) amid complaints from lawmakers that the increased borrowing has not improved living standards.

While $3.1 billion (more than Shs7.6 trillion) remains idle yet
the government continues to incur costs in commitment fees.

On internal borrowing, figures show that between June 2003 and 2011, the domestic debt stock increased by 177 per cent. As of June 30 2011, the total domestic debt was Shs4.5 trillion—(Shs4 trillion constitutes treasury instruments) and (Shs515.4 billion domestic arrears).

The latest debt figures are contained in the Uganda Debt Network report to the Parliamentary Committee on National Economy.

The report highlights the need to control the government’s borrowing appetite and laments the lack of absorption capacity in the economy.

UDN is an advocacy and lobbying coalition of NGOs, institutions, and individuals formed in 1996 to campaign for debt relief Ms Imelda Namaganda, the senior programme officer at UDN, yesterday told lawmakers that the borrowing increased to finance the government priorities in the National Development Plan.

“The 2007 debt strategy is not fully adhered to … since guidelines issued by [finance] are regularly violated. The debt strategy also expired in 2012, leaving a gap in loan acquisition,” Ms Namaganda said. “No evidence of punitive sanctions to accounting officers who disregard provisions of the laws and regulations, leading to escalating domestic debt.”

Uganda was a beneficiary of debt relief under both the first Heavily Indebted Poor Countries (HIPC) and the Enhanced initiatives in April 1998 and April 2000, respectively.

The initiatives, according to a study: ‘HIPC Debt Relief and Poverty Reduction Strategies: Uganda’s Experience’ by Florence Kuteesa and Rosetti Nabbumba, were supposed to enable Uganda remain on a sustainable debt path. But the lawmakers fear that the country is instead slipping into a debt trap.

The Ministry of Finance, in its report on ‘Loans, Grants and Guarantees’, said Uganda’s debt burden as at March 2011 stood at $4.29 billion (about Shs11 trillion), up from $1.4 billion (about Shs3.2 trillion) in 2006/07.

ymugerwal@ug.nationmedia.com

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