According to the report, 17 loan request proposals authorizing government to borrow were approved. These were tabled by government through the Ministry of Finance, Planning and Economic Development and considered by the House National Economy Committee.
Parliament of Uganda
Last year Parliament approved
loans to the tune of 18.69 trillion Shillings, according to the report detailing
the business transacted by the House in the year 2020.
The approved loans are
up from the 6.15 trillion Shillings that legislators approved in 2019.
According to the
report, 17 loan request proposals authorizing government to borrow were
approved. These were tabled by government through the Ministry of Finance,
Planning and Economic Development and considered by the House National Economy
These include; a 1.1
trillion Shillings (US Dollar 300.0 million) loan from the International
Development Association (IDA) of the World Bank Group for budget support for
financial year 2019/2020 to provide sufficient financial resources to the
health sector and to mitigate negative effects of COVID-19 on the economy and
1.8 trillion Shillings (US Dollar 491.5 million) from the International
Monetary Fund (IMF) for Balance of Payments and Budget Support to address the
negative effects of COVID 19 in the financial year 2019/2020.
The others include;
1.67 trillion Shillings (US Dollars 456.3 million) from the Exim Bank of China
to finance the upgrade and construction of national oil roads, 2.2 trillion
Shillings (US Dollars 600 million) from the International Monetary Fund (IMF) and
3.2 trillion Shillings through domestic borrowing to finance the budget deficit
for the financial year 2020/202, 2.7 trillion Shillings (Euros 600 million) from
Stanbic Bank [U] Limited and the Trade Development Bank to finance the budget
deficit for financial year 2019/2020 among others.
A recent International
Monetray Fund- IMF report raised a red flag at Uganda’s rate of borrowing
warning that by 2022, the country’s debt would be unsustainable.
According to the Bank
of Uganda (BoU) monetary policy report for August 2020, the country’s public
debt increased by 20.5 percent from 46.2 trillion in June 2019 to 56.5 trillion
in June 2020. The increase in the public debt according to the report was
attributed to accumulation of interest on old debts and the many acquired new
The Central Bank says
that the bulk of the debt had been acquired in 2020 to enable government
counter the economic distress occasioned by the COVID-19 pandemic.
In the past financial
years, debt repayment has been taking the biggest chunk of the National budget.
Out of the 2020/2021 financial year’s budget of 45.5 trillion, 29 percent of it
(13 trillion Shillings) is appropriated for debt repayment.
Auditor General, John
Muwanga last year noted that although Uganda’s debt to GDP ratio is
still below the IMF risky threshold of 50 percent and compares well with other
East African countries, it is unfavorable when debt repayment is compared to
national revenue collected in the region at 54 percent. Muwanga also says that
some loans absorption levels are as low as 10 percent.