Yesterday, the market turned its head towards Uganda after its President announced that it would borrow money again. The country’s debt burden will continue to haunt it next year as the country’s veteran president seeks reelection.
Uganda said that it is planning to loan about 6.9 trillion shillings, that 1.89 billion dollars to be exact. The country will be borrowing the amount from external leaders next year and 2021.
The East African country will use the borrowed cash to fund its fiscal budget. The controversial decision will come in and haunt President Yoweri Museveni, who seeks to sit again in the country’s highest post.
Reporters claimed that they saw Uganda’s finance ministry budget paper earlier yesterday. According to reports, the document showed that the funds would be concessional and non-concessional credit.
The budget document also didn’t indicate how much was borrowed by the country in the previous financial year. Aside from that, it also didn’t point to whom the funds will be coming.
But experts believe that Kampala will again approach China as it has become one of its biggest external lenders in recent years.
The country’s leader has been in power for more than three decades and is still seeking reelection. Uganda’s next presidential election will be in early 2021, about a year from now.
Last week, the annual performance report of Uganda revealed another loan from the country. According to reports, the country’s Parliament approved a 6.15 trillion Ugandan shillings loan this 2019.
About 11 loan request proposals from Kampala were tabled by the country’s Finance Planning and Economic Development Ministry. The loans faced heavy scrutiny by Uganda’s Parliamentary House’s National Economy committee.
The group led by Chairman Syda Bbumba approved the loans eventually after discussions.
According to one official, the loans got approval because they were necessary for the country’s economy. The borrowed money was also for financing the country’s national budget and revenue collection.
Earlier this year, Auditor General John Muwanga pointed out the country’s borrowing problem in recent years. While speaker Rebecca Kadaga was presenting the 2018 audit report this January, Kadaga addresses the issue.
According to Uganda’s auditor general, the country’s loans boosted the country’s public debt by 22%. The country’s debt to GDP ratio is at 41% and is well below the International Monetary Fund’s risk threshold.
The IMF’s pegged ratio sits at 50%. Still, Uganda’s rating is reasonable compared to other countries in East Africa.