The Ugandan government's decision to borrow Shs 13 trillion to finance the national budget is expected to push the country's debt stock to Shs 109.1 trillion, according to the recently tabled national budget framework paper. The revelation came as the Ministry of Finance presented a Shs 52.7 trillion national budget framework paper for the 2024/25 financial year before the Budget Committee of Parliament.
The documents submitted to the committee outline a resource envelope of Shs 52.7 trillion, comprising domestic revenues of Shs 29.9 trillion, domestic borrowing of Shs 4.1 trillion, external project support totaling Shs 8.8 trillion, and domestic refinancing of Shs 9.4 trillion, among other sources.
Notably, Uganda's support from donors has seen a significant decline from Shs 2.781 trillion in 2023/24 to just Shs 28.9 billion in the proposed budget for 2024/25.
The national debt, as per the 2022/2023 auditor general's report, already stands at Shs 96.1 trillion, a substantial increase from the previous year. This total includes Shs 43.6 trillion of domestic debt and Shs 52.4 trillion of external debt, marking a rise of Shs 9.3 trillion compared to June 30, 2022.
The new borrowing of Shs 13 trillion is anticipated to further escalate the country's debt burden, reaching Shs 109.1 trillion. Out of this, Shs 8.9 trillion is expected to come from external financing, with Shs 28.9 billion allocated for budget financing loans and Shs 8.87 trillion for project loans.
The framework paper reassures that government borrowing from the domestic market is projected at Shs 4.1 trillion for fiscal purposes in the 2024/25 financial year. It emphasizes the government's commitment to maintaining domestic borrowing at no more than one percent of GDP in the medium term, aiming to prevent crowding out of the private sector.
In response to concerns about the sustainability of Uganda's growing public debt, the Secretary to the Treasury, Ramathan Ggoobi, assured Ugandans that the country's debt stock is manageable. Ggoobi highlighted Uganda's active participation in the credit market, contrasting it with other African nations facing challenges in accessing credit due to blacklisting.
"The debt is sustainable; Uganda is fully participating in the credit market. Many countries in Africa are struggling to access the credit market. They can’t be allowed to borrow; they have been blacklisted. We have a good strategy to address the risks, and we know we have risks. We have challenges that we are discussing, but we have a strategy," Ggoobi stated during his appearance before the budget Committee.
