UGANDA’S public debt surged 20.5% in the 12 months to June as the east African country soaked up new credit to help deal with the economic impact of COVID-19, the central bank said on Tuesday.
The new loans mostly came from international lenders including the World Bank and the International Monetary Fund (IMF).
As of the end of June, Uganda’s public debt was 56.5 trillion shillings ($15.33 billion), the Bank of Uganda (BoU) said in a report.
About two thirds of the debt is held by external creditors, and the public debt is now 40.8% of GDP.
The report attributed the 20.5% rise in debt from June 2019 to new borrowing for “countering the economic distress brought about by the COVID-19 pandemic.”
Uganda’s opposition and the IMF have in recent years expressed unease about the ballooning public debt and potential repayment problems.
The government of President Yoweri Museveni, seeking to finance its infrastructure construction programme and shore up political support, has secured large credit lines from China over the last decade.
The central bank said Uganda was still relatively far off potential debt distress but that “significant vulnerabilities are evident.”
“The associated increase in interest payments will be a substantial drain on resources that could have otherwise been used to finance development,” the central bank said.
Uganda’s economic output in the quarter to June shrank by a faster pace, contracting by 3.2%, compared to 1.7% in the previous quarter, the bank said.
Uganda shuttered nearly all businesses, banned vehicle movement and public gatherings as part of its sweeping anti-coronavirus lockdown. – Thomson Reuters Foundation.