Uganda’s public debt has risen to $12.2 billion from June this year from about $9.4 billion in 2017, data from the Ministry of Finance shows.
With the rapid accumulation of debts, payment concerns have risen even as government economists tread between defiance and caution.
The national debt which was equivalent to 37 per cent of GDP in 2017, has now risen to 42 per cent of annual economic output.
The huge loans are intended to finance big infrastructure projects in the transport and energy sectors.
Total interest payment on the debt has risen from $2.6 billion in 2016/17 to $3.3 billion by the end of 2018/19.
The increased payments have been made worse by the diminished tax revenue growth and limited economic benefits linked to some infrastructure projects.
Despite a revenue surplus of $69.3 million recorded in 2018/19, the taxman posted revenue collection deficits for three preceding years in a sign of harsh economic conditions experienced by many businesses and low consumer spending.
According to government statistics, the Uganda Revenue Authority registered a deficit of about $162.3 million in 2017/18 compared to a revenue shortfall of $108.2 million posted in 2016/17.
Albert Musisi, Commissioner for Macroeconomic Policy at the Ministry of Finance, Planning and Economic Development, said that Uganda’s debt-to-GDP ratio remains below the 50 per cent ceiling after the latest economic rebasing. He added that ” The debt to GDP ratio dropped from 41 per cent to 39 per cent after the rebasing exercise but the International Monetary Fund and World Bank concerns are pegged to the speed at which we are acquiring new debt, particularly domestic debt.”
He further said that the borrowing for infrastructure will eventually translate into higher economic growth except in cases where projects are poorly executed.
The co-ordinator of the Civil Society Budget Advocacy Group Julius Mukunda said that about 50 per cent of Uganda’s debt portfolio remains unabsorbed whose cost is transferred to taxpayers who are required to repay loans even when the funds disbursed are yet to be utilised.
Mr Phiri. Vincent Phiri, an economist at NKC African Economics Ltd, a research company based in South Africa said poor execution of the infrastructure projects will hurt the economic growth and the country’s fiscal position.