Uganda chokes on Shs 46 Trillion debt

Finance minister Hon. Matia Kasaija



Uganda’s tax payers will have to cede part of their contribution to the national budget in clearing a debt stock that now stands at Shs 46.7tn according to figures from the 2015-16 Auditor General’s report released in December 2016.

The debt burden has increased from Shs 33tn to Shs 46tn in just one year – between FY 2014-15 and FY 2015/16.

The East African nation’s debt burden is so high that it has outstripped the national budget. Even if the entire 2016-17 national budget was spent on servicing it, tax payers would need to dig an extra Shs 16tn from their already empty pockets to clear it. Uganda’s budget estimates for the next financial year (2016-17) stand at Shs 30tn.

Why the huge debt

For the last five years, Uganda has failed to use its loans – both domestic and external borrowing: the low absorption and non-performance of the loans mean more interest on money that is not being used.

As of June 2016, government had committed to use about Shs 18tn for implementation of projects yet the money was not disbursed. This cost the country commitment charges of about Shs 21bn.

Cost of debt servicing

Estimated 2016-17 budget figures reveal the effect of our debt burden. Uganda will spend just over 12 per cent (over Shs 2.7tn) of her budget (Shs 20tn) on paying interest on loans and debts. This expenditure is only lower than that of works and transport, and the energy sector.

Uganda spent about Shs 1.7tn on the same purpose in 2015-16 – this means that the cost of payment of interest on loans and debts will rise by over Shs 1tn.

The high debt servicing costs partly explain why key sectors – education, agriculture, health and tourism – will suffer huge cuts in the FY2017-18.


Please enter your comment!
Please enter your name here