Government will use over half of its revenue collections to pay back loans in the next two years. Says a new report.
According to latest report released by the Auditor General John Muwanga for the year ending December 2018 to the Speaker Rebecca Kadaga at Parliament on Friday, Uganda’s public debt has increased from Shs 33.99 trillion as at June 30, 2017, to Shs 41.51 trillion as at June 30, 2018.
‘’Although Uganda’s debt to GDP ratio of 41 per cent is still below the International Monetary Fund (IMF) risky threshold of 50 per cent and compares well with other East African countries, it is unfavorable when debt payment is compared to national revenue collected which is the highest in the region at 54 percent”, the audit report reads in part.
Muwanga also noted that significant value loans have stringent conditions which could have adverse effects on Uganda’s ability to sustain its debt.
The Audior General also warned that loans come with tough conditions which include a waiver of sovereign immunity by the government over all its properties and itself from enforcement of any form of judgment, adoption of foreign laws in any proceedings to enforce agreements, requiring the government to pay all legal fees and insurance premiums on behalf of the creditor.
Ms Keto Nyapendi, the Assistant Auditor General, spoke about the national debt getting on the verge of swallowing revenue collected. “Fifty per cent of the loans sampled totalling Shs3.9 trillion will expire in 2020. If government is to service the loans as projected in the next financial years, it would require more than 65 per cent of the total revenue collections,”
Already, the highest percentage of the current budget for financial year 2018/2019 (about Shs10 trillion) goes to loan servicing, a trend Kadaga said is not sustainable.
“The issue of public debt is worrying; if we are going to require all that money in such a short time, then that is going to be difficult,” said Kadaga.
Muwanga also said government has failed to collect up to Shs20b it has won in court awards, which he said is suspicious given the aggressive manner in which those that get awarded against government pursue their claims.