Rukia Nakamatte
26 November 2008
Kampala — The Uganda Debt Network (UDN) has expressed fear over the increasing external debt stock. The fears were expressed in a statement to the President after media reports that Uganda's external debt continues to rise amid policy implementation failures, lack of accountability and poor loan utilisation.
UDN is a civil society organisation that lobbies for policies that ensure that borrowed and national resources are prudently managed in an open, accountable and transparent manner.
According to the Bank of Uganda annual report, the total foreign debt stock has increased from $1.47b last financial year to $1.99b. The Government expenditure and net lending as a percentage of the Gross Domestic Product rose to 21.0% in 2007/08 compared to 18.7% in 2006/07. In nominal terms, the Government expenditure and net lending grew by 27.1% compared to 5.55% the previous year.
"This is a worrying prospect considering that after the previous arduous relief efforts resulted in savings that were not prudently managed, similar advocacy for debt relief may not be considered seriously for our debtors," read the statement signed by UDN Executive Director Patrick Tumwebaze.
UDN, working with individuals, civil society organisations, public officials and parliamentarians, campaigned for external debt relief for Uganda, which eventually led to debt cancellation under the World Bank/ IMF Highly Indebted Poor Countries Initiative (HIPC) in 1998.
The statement noted that the increasing unproductive debt has negative implications for the Government's poverty reduction strategies in particular to the agriculture and health sectors.
"We are haunted by the reminder of the onslaught of a 30% increase in Uganda's external debt in just under a year. The statistics provided clearly indicate that our external debt stock rose from $1,467m to $1,900m between 2006/7 and 2007/08.
This situation could be even further worsened as a consequence of the battering we are enduring due to the current global economic crisis. Our reserves are likely to dwindle with serious adverse impact on our export base," the statement read.
Recent reports in the media revealed that the debt accumulated as a result of the Government's failure to supervise and monitor the performance of its loans, most of which were for consumption. In an interview, Tumwebaze asked the Government to investigate the causes of lack of absorption capacity of some ministries.
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