Finance minister Matia Kasaija has responded to wider concerns that Uganda’s debt had reached a dangerous edge, saying “government borrowing is controlled and guided by the public debt management framework 2013”.
The auditor general’s report for 2018 has showed that Uganda’s public debt is edging closer to unstainable levels and the country might struggle to pay back. The report added that some of the loans had “stringent conditions which could have adverse effects on Uganda’s ability to sustain its debt.”
This, the auditor general said, could lead to a“waiver of sovereign immunity by government over all its properties and itself from enforcement of any form of judgement, adoption of foreign laws in any proceedings to enforce agreements, requiring government to pay all legal fees and insurance premiums on behalf of the creditor”.
This could see some government key installations like the airport, buildings and other properties taken over by creditors to be able to repay their money.
But Kasaija said in a statement on Tuesday: “The government of Uganda aims to finance its activities and projects in the most effective manner.”
“Multilateral creditors like the World Bank have provided the largest part of government’s financing with the most favourable financing terms.”
Kasaija said multilateral debt was on concessional terms, including a grant element which means it would not be burdensome to the country.
“The government will continue to be cautious on taking on new projects,” he said.
He said multilateral lenders accounted for 68 per cent of outstanding debt while bilateral creditors accounted for 31 per cent and commercial banks only one per cent of the external debt stock.
Uganda’s public debt stock stood at $10.7bn or Shs 41.3tn as at June 2018. This is equivalent to 41 per cent of GDP.