Kampala, Ugnda — Uganda's Domestic Debt has gone up by 16.6% according to a study.
A report that was conducted by a Kampala based research firm Kenwill International Limited on behalf of Uganda Debt Network shows that the accumulation of Uganda domestic debts have reached $1730.9m in 2011 from $615.4m in 2003.
The study was assessing the impact of increasing domestic debts on Uganda's economy.
"Uganda's domestic debt stock has been growing between June 2003 and June 2011, the country's debt stock increased from Ush1.6321 trillion (U$615.4million) to Ush4.5359 trillion (U$1730.9million) in June 2011 which is equivalent to an average annual growth rate of 16.6%.
"This scenario calls for an immediate explanation from the Government because there's no relationship between development and the current government debts," read the study.
The study says that the Uganda government domestic debts are accruing mainly due to the issuance of treasury securities, bonds and loans from Commercial Banks.
It shows that in the period of twelve months between (April-2011-April2012) the government's treasury securities offered were Ush3.87 trillion(U$1500million) of which treasury bills contributed 1.63 trillion(U$615.4million) (42%) while treasury bonds contributed 2.24trillion(58%)(U$861.5million).
This indicates that in the period government securities increased by 42.9% which is slightly higher than the growth over the period of April 2010 to April 2011.
Mr. Robert Waswaga the team leader in the study said the government as of 30/April/2012 had paid total interest on outstanding treasury bonds to money totaling to Ush228 billion (U$876123) while on treasury bills the government paid Ush343billion (U$1.3million) totaling to Ush572 billion (U$2.2million) being paid as interests on treasury bills and bonds issued by the central bank to the public.
Waswaga projected that in this year 2012/2013 government will pay an estimated UGX713.9 billion (U$2.7million) interest much higher than the budgets for productive ministries like the agriculture sector which is UGX406.1billion (U$1.6million) and that of Water and Environment which is Ush365.9billion(U$1.4million).
"Why the government domestic debts are increasing is, Uganda is running a deficit budget with external financing (grants and loans).
"The government also borrows to avoid macro economic instability increase in money supply," said Waswaga.
When asked for a comment about the released study, that shows rising governments domestic debts, the Deputy Governor Bank of Uganda Dr. Louis Kasekende said the government has to borrow such that its programs like construction of roads can go on as well as education and health.
"A serious government cannot wait for the treasury to mobilize resources when their other avenues to get money that is why Bank of Uganda issues the treasury bills and bonds such that money is mobilized locally to finance government programs," Kasekende said.
Mr. Patrick Tumwebaze the Executive Director of Uganda Debt Network said its collective responsibility for all citizens of Uganda to demand government and the parliament to limit borrowing of money especially for financing non priority areas.
"We should be concerned that fiscal indiscipline often resulting from Government failure to stick within its budget has continued to bloat the country's domestic debt stock, "he said.