In a firm commitment to fiscal discipline, Permanent Secretary and Secretary to the Treasury (PSST) Ramathan Ggoobi has reaffirmed that the Ugandan government will only engage in borrowing when the cost of debt is affordable.
Speaking during the second quarter expenditure release for the Financial Year 2024/25, at the Ministry of Finance’s headquarters, Ggoobi emphasized that the government remains cautious of its borrowing strategies, ensuring that loans are secured only under favourable conditions that will not strain the national budget.
“We shall not borrow money from the markets at any cost. Our borrowing strategy is grounded in maintaining sustainable debt levels, and we shall borrow only when the cost is affordable,” Ggoobi stated. He noted that the government is acutely aware of the repercussions of high-interest loans and is focused on balancing development needs with fiscal prudence.
“I reiterate, that the Government debt position is sustainable and within internationally recognized benchmarks,” he asserted.
Ggoobi further emphasized that the government would not spend money it does not have, reflecting a stringent approach to managing public funds. “There is no money we shall spend when we don’t have it. Our expenditure will be aligned with available resources to avoid burdening the future generations with unsustainable debt,” he added.
He added; “There are no more budget games and money for middlemen in government. That money for middlemen is over. We are growing the economy tenfold.”
PSST’s echo comes at a time when Uganda continues to face challenges related to managing its debt portfolio, particularly amid rising global interest rates and inflationary pressures.
His declaration aligns with the broader government policy of reducing reliance on borrowing to fund public projects, focusing instead on enhancing domestic revenue mobilization through tax reforms and efficiency in public sector expenditure.
Ggoobi also reassured the public that despite the restrained borrowing, key development projects, particularly in infrastructure, health, and education, will continue to receive funding, albeit within the government’s affordable limits.
Uganda’s debt status
As of 15th October 2024, the Government had issued domestic debt amounting to Shs 6.825 trillion. Of this, Shs 3.475 trillion was for refinancing maturing debt (roll-over) and Shs 3.350 trillion was for financing general budget activities (net domestic financing/NDF).
The issuance so far represents 32 per cent of the issuance target for FY 2024/25. There was a marginal frontload of domestic debt issuance into the first half of the fiscal year to cater for Government financing requirements and at the same time smoothen the seasonality reduction of domestic revenues in Q1.
Looking ahead, the inflation outlook is good and the Central Bank in response reduced the CBR from 10 per cent to 9.75 per cent on 7th October 2024. Therefore, there is an expectation that interest rates on Government securities will be steady with the possibility of reduction.
Meanwhile, the Ministry of Finance released the Q2 Expenditure and the expenditure Limits for FY 2024/25 were derived from the quarterly Work Plans and Procurement Plans of Ministries, Departments and Agencies and taking into consideration the projected resource inflows.
For this Quarter (October-December 2024), Shs 15.99 trillion, has been released representing 22.2 per cent of the approved budget.
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