UGANDA: MUSEVENI’S SLEEPLESS NIGHTS AS PUBLIC DEBTS HIT 51.9 PERCENT; WAY ABOVE IMF’S 50 PERCENT DEBT-GDP RATIO THRESSHOLD

We need to get the issue of debts behind us. We have to move on
-A +A
0

The new Gulu district Chairman Christopher Opiyo-Ateker being sworn into office
“The rising debt in the country needs to be investigated. We are paying billions of shillings on unutilized loans, and the people responsible must be punished. We have borrowed trillions of shillings for infrastructure projects with hope that people’s situation in the pocket will improve. Unfortunately, money is in the hands of a few people and most of us are struggling to make ends meet”
“We want to put this matter behind us so that we move forward. It is like a thorn in the feet of my predecessors”
GULU-UGANDA: When Uganda’s own independent daily newspaper, The Daily Monitor first broke the news that each Ugandan now owed UGX 1.5 million (US$ 414) in debts constructed by government, Reuters News Agency reported that payment of public debts of Uganda, now at US$17.96 billion (UGX 66 trillion) might have to be renegotiated. The major creditors to Uganda’s public debts are China, The World Bank and The International Monitory Fund.
External debt now stands at US$10.45 billion (which represents 68.4 percent) of the total debt burden while domestic debt is US$4.82 billion (representing 31.6 percent) of the total debt burden.
Critics believe that public debt is expected to rise to 49.9 percent of Gross Domestic Product (GDP) by the end of 2021 and rise sharply to 54.1 percent of GDP in 2022, which they believe is meant to overcome revenue shortfalls, COVID-19 related expenditures and support to economic recovery.
The outgoing tenth parliament passed the 2021/2022 Financial Year very huge budget of UGX45 trillion (about US$12.43 billion) amidst some challenges like the Coronavirus pandemic, especially the new strain identified in India, South Africa and some cases are already reported here in Uganda, economic revitalization, social services, the oil sector and debt repayment, among other priorities. This budget will be implemented by the new parliament elected in January 2021.
A total of UGX 3 trillion (about US$ 82.9 million) was identified from the 2021/2021 Financial Year budget which was budgeted for consumptive expediters and was relocated to development expenditures. The resource envelop is dwindling where domestic revenue in the 2021/2022 is expected to decline by UGX 116.5 billion (about US$ 32.2 million) from UGX 21.8 trillion (about US$ 8.9 million) in the 2020/2021 Financial Year.
There is mix feelings over public debt burden; some believe that Uganda is already in debt crisis while others is convinced that the government is playing with fire as it is quickly sliding into debts distress
The Daily Monitor of Monday, May 10, 2021 reported, in a story titled; “Why Government is borrowing” that Sate Minister for Finance in-charge of Planning, David Bahati on Friday, May 07, 2021 listed 13 projects that he said “must be implemented to spur the growth of the economy, support the industrialization agenda, create wealth and jobs for Ugandans”.
While a moderate debt improves welfare, and enhances growth as government invests in priority sectors of the economy, economists say high debt can be damaging. IMF set 50 percent debt-GDP ratio threshold.
When The Daily Monitor rang the alarm bell over debt burden Ugandans are forced to carry by uncaring government, Members of the tenth parliament ordered the Minister of Finance, Matia Kasaija, to present to the House a comprehensive statement on the status of the country’s debts and plans to avert an impending crisis.
As of December 2020, total debt stock was US $ 17.96 billion (equivalent to UGX 65.83 trillion) indicating an increase from US$ 13.3 billion (equivalent to UGX 49 trillion) at the end of December 2019. External debt contributed a share of 64.98 percent equivalent to US$86.29 billion (UGX 229 trillion).
“Government is equally concerned about the rise of increased risk of a fiscal crisis, limited revenue for investments, and higher inflation as well as under minding investor confidence and weakening of the shillings against the US dollar”, State Minister Bahati said. He talked of “cautious borrowing against competing demands, key prioritized infrastructure projects in the transport and oil and gas sectors”.
Mr. Bahati talks of ‘cautious borrowing against competing demands, key prioritized infrastructure projects in the transport and oil and gas sectors’. “In the next few years, public debt is projected to increase mainly on account of the need to implement NDP III and NRM manifesto” Key infrastructure projects like the Standard Meter Gauge Railways, the East African Crude Oil pipeline, the oil refinery, among others in the transport and gas sectors.
He says domestic revenue collection has been increasing steadily from 24.9 percent in the 2013/14 F/Y to 47.8 percent in the 2014/15 F/Y of GDP as government implements the Domestic Mobilization Strategy. He revealed that the economy has been resilient and is projected to grow at 4.3 percent in the 2021/22 F/Y and thereafter at the levels of 6 percent of above in the medium level.
However, the chairman of the Parliamentary Account Committee (PAC), Mr. Nandala Mafabi says “the debt crisis in the country reflects a huge increase in government spending, COVID-19 interventions and poor revenue collections impaired by the lockdown.
“The rising debt in the country needs to be investigated. We are paying billions of shillings on unutilized loans, and the people responsible must be punished. We have borrowed trillions of shillings for infrastructure projects with hope that people’s situation in the pocket will improve. Unfortunately, money is in the hands of a few people and most of us are struggling to make ends meet”, says Mafabi.
The chairman of the Budget Committee of parliament, Mr. Amos Lugoilobi, notes that the ratio of domestic interests cost to revenue (including grants) is projected to increase to 17 percent in the 2021/22 F/Y from the 16.1 percent at the end of 2020/2021 F/Y.
“’This is above the public debt management threshold of 12.5 percent. It implies that government is spending more revenue on domestic debt service at the cost of service delivery, and therefore less discretionary budget is available for expenditure in other critical areas. Government should halt creation of administrative units and expedite the merger of institutions to eliminate duplications and wasteful expenditures thereby reducing the need to borrow for budget support”, he says.
“There is also weak project implementation capacity, delays in procurement processes, challenges withy rights of way compensation issue. We are also working with accounting officers to ensure that contract management issues are addressed. We are reviewing poorly performing projects with interest of either cancelling or restructuring”, says Mr. Bahati.
It is not only the central government that is reeling in debt. In 2001, 89 parish chiefs in Gulu sued the district for unlawful termination of their employment and were awarded UGX2.6 billion shillings (about 718.2 dollars) in compensation at an interest rate of 18 percent per annum. However, this grew to UGx6 billion (about US$ 1.7 million dollars) by 2021.
The new district Chairman, Mr. Christopher Opiyo Ateker, says he has instructed the Chief Administrative Officer of the district to write to the Court Bailiff to file the record of the balance of the debt, which according to him, is about now to the tune of UGX 400 million (about US111000dollars).
“We want to put this matter behind us so that we move forward. It is like a thorn in the feet of my predecessors”, says Ateker.

Also Check Out...

Elections scheduled for early next year in Mali could be postponed by months
Mali Elections Could Be Postponed
Suriname's 60-year-old vice president, Ronnie Brunswijk, recently played a continental competitive soccer match
Soccer Clubs Banned After Suriname
entrepreneurs of color are taking steps to make sure the state’s future pot industry is as diverse as possible
Maryland Minority Cannabis
Theoneste Bagosora, a former Rwandan army colonel regarded as the architect of the 1994 genocide
Theoneste Bagosora, Alleged
the reluctance among prominent Democrats, including Joe Biden, to do anything to protect the right to vote.
John Oliver On Voting Rights: “We
Non-Southern states with schools honoring Confederate leaders are Missouri (5), Minnesota (3), California (2) and Washington (1)
Public Schools Named After