The Independent Uganda: You get the Truth we Pay the Price
Government view on debt sustainability
However, the government experts argues that the government remains cognizant of the importance of debt sustainability to overall macro-economic stability and as such will continue to priorities concessional borrowing.
The experts say the government will undertake various measures including operationalisation of the Domestic Revenue Mobilisation Strategy aimed at increasing domestic revenue by 0.5 percentage points of GDP each year, enhance efforts towards export promotion and import substitution to increase foreign currency inflows and reduce the outflows, sequence projects, with priority given to those generating a bigger growth dividend and limit domestic borrowing to not more than 1 percent of GDP in the medium term to slow down debt accumulation and promote its sustainability.
However, Kapwepwe says the government needs to put on hold borrowing altogether, do debt stock and carry out institutional reforms including restructuring with a view of weeding out wasteful expenditures.
“… Otherwise sooner than later, we shall hit a dead end like it has been the case in Zambia, Sri-Lanka and Pakistan,” he said, in reference to the failure by the three countries to meet their loan obligation.
Last year, Zambia declared that it was unable to repay $42.5 million towards its Euro-bond liabilities while Sri Lanka and Pakistan turned to China rather than the International Monetary Fund bailout to meet the foreign debts obligations.
Jane Nalunga, Executive Director at the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) Uganda earlier told The Independent that it would be prudent for government to borrow while also minimizing on the administration costs and elimination corruption.
“Borrowing parse would not be bad but it is it is the details on where we’re getting the money…we should also show that we really care and can live within our means,” she said.
“We need some higher level of transparency and accountability, put that money in productive sectors such as industries and agriculture to create jobs.
Similarly, Ezra Francis Munyambonera, the Head of the Macroeconomics Department at the Makerere University based Economic Policy Research Centre said that it is time for government to strive for a balance between borrowing for infrastructure development and provision of social services.
“We now have to balance in investing in infrastructure developments such as roads and electricity and social services such as health, education as well as agriculture and industrialization to complement each other to achieve equitable growth,” he said.
Munyambonera said the government should initiate negotiation with lenders especially China to re-allocate early acquired loans to other sectors which are vital to stimulate economic activities during this post COVID-19 period rather than focus on infrastructure development where it presumably earns high returns in terms of creation of jobs for their labour force and market for their raw materials.
Public debt in statistics
Government to borrow approximately Shs 12.8trillion for the FY 2021/22
Foreign loans will consist of Shs 10.3 trillion and Local lenders Shs 2.5trillion
Total public debt as at June 30, 2020, stood at Shs 56.5 trillion, up from Shs 46 trillion as at June.30, 2019.
This implies that each of Uganda’s estimated 39 million people owe lenders around Shs 1,448,717.
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