Browsing: Increasing debts

Uganda rallies regional states to rethink expensive debt path

A three-day regional conference on debt management in sub-Saharan African convened in Uganda this week is expected to conclude into signing a paper to be presented at several forums.

The forums will include the next World Bank spring meeting to highlight governments’ discomfort with some conditions tied to loans.

Uganda’s Ministry of Finance acting director for debt and cash policy management, Maris Wanyera, said the conference will be attended by delegates from 16 countries, under the theme “sustainable public debt management and a strengthened economic growth”

She also said that in light of the ongoing borrowing frenzy by African countries to finance their development agenda, the conference is long overdue.

“The idea is to come up with a strategy; a voice we can use while negotiating some of these loans. Debt [borrowing] is not bad at all, as long as we borrow for the right purposes and negotiate well, but …

The Bank of Uganda has warned government against the accumulation of foreign debt, saying the central bank is under a lot of pressure to obtain foreign exchange to repay loans.

Speaking during the IMF and AfDB-organised conference in Kampala during the weekend, Bank of Uganda Governor Emmanuel Tumusiime Mutebile, said that the rising cost of servicing the debts is putting pressure on the Central Bank to accumulate foreign exchange reserved for future imports.

“The biggest challenge for Bank of Uganda (BoU) is how to accumulate foreign exchange reserves to service external debt. The forex reserves have to be purchased from the domestic market, without causing sharp exchange rate depreciation pressures that would eventually pass through to domestic inflation, thereby warranting tightening of monetary policy and later on impacting on economic growth,” said Mr Mutebile

Mr Mutebile revealed that for instance, in the 2019/20 financial year, the central bank has to …

Zambia’s external debt stock had increased to $10.23 billion by end of June 2019.

With the International Monetary Fund warning that the country’s debt was becoming unsustainable, Zambia’s finance minister Bwalya Ng’andu said Zambia would postpone and cancel some planned loans, refinance existing ones and stop offering guarantees for quasi-public entities.

He added that the treasury would also be more cautious in contracting new debt as he read a surplus budget that will be partially financed by external partners.

“The government proposes to spend Kz106.0 billion ($8.03 billion) in 2020, representing 32.4 per cent of GDP of this amount Kz72.0 billion ($5.5 billion) will come from domestic revenues while the balance will be raised through domestic and external financing,” Dr Ng’andu told legislators.

The finance minister said the government will not replace its value-added tax (VAT) with a controversial non-refundable sales tax which met fierce opposition from businesses, opposition and …