Uganda risks return to unsustainable debt – Csbag
KAMPALA,JUNE 20 – Uganda’s debt is fast approaching tipping point with the country at risk of falling back into unsustainable debt, warns the Civil Society Budget Action group Csbag.
Uganda was among the first beneficiaries of relief under the Highly Indebted Poor Countries debt relief early in the last decade but as it borrows heavily to finance infrastructure, its debt is nearly $6 billion equivalent to 34 percent of GDP.
Finance Minister Matia Kasaija presented an Ushs 26.3 trillion budget for fiscal 2016/17, 24percent of which will go to debt servicing.
“We are concerned about the rising debt and the failure to meet old debt obligation to the tune of Ushs 4.9 trillion which is being carried forward year on year,” says Csbag Coordinator Julius Mukunda.
Imelda Namaga the Programs Director of Uganda Debt Network says the mounting debt will soon make it difficult for the finance minister to achieve budget objectives.
A major challenge for Uganda has been poor execution of large infrastructure projects which limited their impact on the economy. Absorption of resources remains at a pitiful 53 percent meaning that the country is paying interest on borrowed funds that are not contributing to economic growth.