The Ministry of Finance and Economic Development Matia Kasaija has revealed that Uganda is to borrow over USD1billion to revamp the economy that has been affected by Covid-19.
In an interview with this website on Monday, the minister said that Uganda’s economy has severely been affected by the pandemic and they will have to borrow from African Development Bank (ADB) or International Monetary Funds (IMF) some big sums of money which will be injected in the economy.
“Due to the outbreak of this infectious disease, lots of things went on standstill yet they were generating a lot of revenues to the country. For example businesses in the city were paralysed, tourism and even hotels stopped working, so to get back our economy on the road, we need to borrow money, we have already borrowed over USD500m and we are expecting to borrow another USD500m from African Development Bank, IMF and even some other friends will borrow us,” he said.
Government’s move to borrow follows the poor performance of the economy in the last months. According to the report issued by Ministry of Finance this month, government registered Shs1.4 trillion revenue shortfall for the first three quarters (July 2019 to March 2020) of the current Financial Year ending 30th June 2020.
The report again shows that Uganda Revenue Authority (URA) collected only Shs13.4 trillion instead of 14.837 trillion which was the target in the last nine month since June 2019, which has pushed to another huge borrowing.
Yet currently the stock of Uganda’s total public debt as of December last year is Shs48.91 trillion, and this due to increased huge borrowings by the government in the recent past, however, Kasaija confirmed that the moment Uganda acquires the USD1bn, the debt burden will be manageable since the economy will resume as it was before the outbreak of Covid-19.
So far Uganda’s external debt is Shs31.53 trillion, while domestic debt Shs17.38 trillion. Currently, China is Uganda’s top bilateral lender taking over almost 75 per cent, France, the United Kingdom and Japan all combined tantamount to 25 per cent.
The UK is financing construction of the Kabaale International Airport in Hoima, while Japan financed the new Jinja cable bridge.
“We are still discussing if they can forgive us some debts which I can’t confirm but what I know is that we are talking about it with some directors in these big banks and other foreign lenders. The good thing we already submitted in our requests. They can forgive us these debts in two ways, one is to pay without interest for a certain time and another one is to increase on the period of paying back from 10 years to 20,” he said.
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