In response to the Coronavirus pandemic, the government has seen a sharp rise in borrowing to fight the impact of the pandemic on the economy and enable the recovery program.
Debt to GDP Ratio of the country has risen from pre-covid level of 41.0% in the 2019/2020 financial year to 46.7% in the 2020/2021 financial year and is projected to hit 52.4% at the end of this financial year 2021/2022.
According to figures released by Bank of Uganda the current public debt stands at 73.78 ttrillion which is a 3.1% increase from June 2021 figures.
The public debt GDP ratio is expected to peak at 54.1% in the coming financial year 2022/2023 before curbing down in 2023/2024 due to revenues from increased economic development and oil revenue that is expected to start flowing in the 2024/2025 financial year.
The ratio is projected to increase to over 52.4% by the end of this current FY2021/22 and peak at 54.1% at the end of the FY2022/23 #EconGrowthUg22 pic.twitter.com/fC7tmxO4aF
— Uganda Media Centre (@UgandaMediaCent) January 13, 2022
Government attributed the increase in public debt to the slowdown in the economy which has reduced government revenue in form of taxes, necessitating increased internal and external borrowing.
Public debt though inevitable increases government spending to service loans. In the 2021/2022 44.7 Trillion budget, 8.7 Trillion (19.5% of the budget) was used to service loans and the figure is expected to increase in the 2022/2023 budget.
Uganda’s Public debt to GDP ratio increased from time to time being the third highest in the East African community below Kenya’s 65.4% and Rwanda’s 79% but above the one of South Sudan, Tanzania and Burundi.