Uganda's external debt is now estimated at $5.805 billion (approximately Shs 15.1 trillion), which places us in the top rank of highly-indebted countries with questionable capacity to pay back.

Although Tanzania and Kenya have the biggest external debt in the region, at $11.5bn and $11.1bn respectively, experts say, they have an edge over their counterparts because of their large economies that give confidence that they can pay back. Rwanda's debt is estimated at $1.1bn and Burundi's at $632m.

Uganda's size of debt also places it among the most indebted countries in the world, economic analysts said on Friday, during a workshop at Speke Resort Munyonyo. The workshop, organised by the Advocates Coalition for Development, ACODE, and the Parliamentary Commission, discussed the management of public finances in Uganda. Some of the key speakers included Godber Tumushabe, the executive director at ACODE.

"This is worrying because we keep on borrowing and nothing is done with most of these loans apart from benefiting a few people. We borrow to fund the fat men," observes Zie Gariyo, an independent researcher and former director at Uganda Debt Network, a local non-governmental organisation formed in 1996, to campaign for debt relief for Uganda.

According to World Bank data compiled by Zie Gariyo, before the NRM came to power, Uganda's external debt averaged at $732.7m (approximately Shs 1.9 trillion). However, after the implementation of the Structural Adjustment Programme policies, the figure had doubled to $2.2bn and by 2004, the external debt had peaked at $4.7bn.

In mid-1990's, Uganda was classified as one of the most highly-indebted poor countries with unsustainable debt burden because it could not pay its debt. Following the accumulation of a debt stock of $3.6bn, Uganda became the first eligible country under the World Bank/IMF led Highly-Indebted Poor Countries (HIPC) initiative to reduce the debt burden, to receive a debt relief amounting to $2bn.

Unfortunately, the debt stock shot up again in 2006 to $4.1bn prompting another debt cancellation under the enhanced HIPC initiative. Under the initiative, Uganda's debt burden was reduced from $4.1bn to $1.6bn.

Within six years, by March 2013, the debt stock was at $5.805bn, surpassing what had been accumulated by the country in 15 years ever since the NRM came to power. "This is historic and we need to get worried as a nation because this is going to keep us in a debt trap if we don't revisit our borrowing instincts," says Gariyo.

Children's burden:

Gariyo and other observers agree that the debt burden is not so much felt today but it is going to baffle the Uganda of tomorrow when most of the loans mature.

"These undertakings are not sustainable. It is like leaving behind debts for your family. The next generation is going to be indebted to the creditors," said Gariyo.

Buliisa MP Stephen Mukitale, chairperson of Parliament's committee on the National Economy, that scrutinises loans, says the borrowing is necessitated by low local tax revenues.

"We can only stop borrowing so long as the nation's tax base is expanded to generate the required funds to fund our budget," Mukitale says.

According to Gariyo's figures, most of Uganda's debt is owed to the World Bank. Of the total debt stock, 88.2 per cent is from multinational creditors. And, 90 per cent of the multilateral debt is owed mainly to the World Bank/IDA and ADB/ADF, making them the single most source of borrowing. Currently, the country's debt service is estimated at $61.3m as of financial year 2012/13.

Viability of loans:

In her budget speech last month, Finance minister Maria Kiwanuka said many government sectors lacked the capacity to absorb loans and grants once the government had acquired them. The ministry has also blamed procurement red tape and preparatory procedures for projects stalling.

Gariyo argues that most of the projects for which money is borrowed close without delivering the envisaged results.

"So, where does the money go?" Gariyo asks. Among the projects that Gariyo says closed without much being done include the Nutritional Child Development Project a $34m loan, which was approved in 1998 and the $17.9m Agricultural Sector Management Project (1996).

Although 81 per cent of the budget needs will be funded by the domestic revenue, government will increase external borrowing to scale up essential investments. Yet with more borrowing is likely to come more questions like Gariyo's: where does the money go?