Uganda: Public Debt Projected to Increase, Parliament Told

Isaac Kasamani / Thomson Reuters Foundation
Comfort Wanicingrwoth, a hawker and a member of the Federation of Kampala Hawkers and Vendors Association, poses for a picture during an interview in Kampala, Uganda, July 29, 2022.
1 September 2022
Nile Post (Kampala)
By Muhamadi Matovu

The vice chairperson of the parliamentary committee on National Economy, Robert Migadde has said the total public debt has increased over recent years due to the implementation of the government's investment agenda and the effects of the Covid-19 pandemic that caused revenue shortfalls.

On Tuesday, Parliament approved two reports on the state of indebtedness, grants and guarantees and another one on the performance of the economy.

According to the report, Uganda's public debt stock increased by 22% from Shs 56.938 trillion in the financial year 2019/20 to Shs 69.513 trillion by end of the financial year 2020/21.

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Migadde explained that public debt is projected to increase over the medium term as the government continues to implement its investment programme to boost economic recovery.

Whereas the debt level is still sustainable, he said debt service ratios point to elevated risks majorly due to the slower growth of export earnings.

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He proposed that the government should support economic growth by boosting exports to enhance the country's reserves among other things.

The committee called on government departments, agencies and ministries to prioritise counterpart funds to ensure efficient, effective, and timely implementation of projects to maximise returns to borrowing and minimise deviations from fiscal plans.

"They include payments of taxes by government on behalf of investors; payment of taxes on goods procured by organisations where government is obliged by agreement and; on behalf of some religious, cultural and Non-Government Organisations (NGOs)," part of the report read.

According to the report, in the 2020/21financial year alone, URA collected Shs18.3 trillion (12.4 % of GDP) and lost Shs7.7 trillion (5.2 % of GDP), implying that without the tax expenditures, the government could have collected Shs 26 trillion. (17.6 %).

Migadde said with 17.6 percent of tax revenues to GDP, the country's budget deficit would significantly decline and reduce the borrowing need.

Parliament asked the government to develop mechanisms that will ensure the country returns to a low risk of debt distress.

Several MPs raised different concerns about the report with many proposing that the government focuses on agriculture and exports.

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