Uganda’s Public Debt Situation
Uganda is facing a significant challenge as its public debt has reached 86.7 trillion shillings as of June 2023, equivalent to 47 percent of the country’s Gross Domestic Product (GDP). The current budget of 52 trillion shillings allocates a substantial 17 trillion shillings for servicing this debt.
This growing debt burden is projected to have adverse effects on the government’s ability to allocate resources for development projects in the near future. The acting budget director at the Ministry of Finance Planning and Economic Development, Mr. Ishmael Magona, attributes this situation to the rising costs of interest payments and external debt repayments.
Budget Outlook for 2024/2025
The figures presented in the budget strategy for the financial year 2024/2025 indicate a concerning trend. The total government discretionary resources, which provide flexibility in budget allocation, have diminished by UGX 3.470 trillion. In the current financial year, the discretionary envelope was already reduced by UGX 24 billion.
Key budget highlights for 2024/2025 are as follows:
- Interest payments have increased by UGX 1.5 trillion, reaching a total of UGX 7.6 trillion.
- External debt repayments have surged from UGX 2.6 trillion to UGX 3.2 trillion.
Impact on Development Funding
Mr. Henry Musasizi, the state minister in charge of General Duties at the Ministry of Finance, emphasizes that this situation will result in fewer funds being available for development and investment projects. He points out that the rising interest payments are a primary factor causing this budgetary strain. The growth in interest payments continues to burden Uganda’s financial resources year after year, impeding the government’s ability to invest in development initiatives.
