East Africa: Rising Public Debt Stifling EA Countries Development Budgets

opinion

The East African region has sustained an average growth rate in excess of 6 per cent between 2012 and 2017, which is more than double the global average. Although there are prospects for continued economic growth ascribed to improved investments in infrastructure, debt-related increased public expenditure is increasingly stressing budgets of East African economies.

Three EA governments - Uganda, Tanzania and Kenya - will spend more than $14b on debt repayment in the financial year 2018/19. This, being about half of their target revenue collections, raises the question: "Can the EAC countries stem Debt sustainability as their appetite for borrowing grows, fuelled by investment in big infrastructure projects and rising budget deficits?" In their budget statements, Tanzania, Uganda and Kenya acknowledge that their revenue authorities are struggling to meet the collection targets, underlining the potential burden of expensive short-term debt.

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