A report in December 2023 revealed a rise in Uganda’s public debt, sparking concerns about the country’s financial stability. The Ministry of Finance disclosed that the debt grew from $20.99 billion in the financial year 2021/22 to $23.66 billion in 2022/23. Despite this increase, the debt-to-Gross Domestic Product (GDP) ratio decreased slightly from 48.4% to 46.9% due to GDP growth.
Every financial year, the Ministry of Finance presents a report on public debt to Parliament as required by law. This report outlines the state of public finances, including debt, grants, guarantees, and other financial obligations. It serves as a critical tool for assessing the country’s economic health.
The stock of public debt surged from $21.74 billion in December 2022 to $24.60 billion by the end of December 2023. Notably, both external and domestic debt increased during this period. External debt rose from $12.85 billion to $14.64 billion, while domestic debt increased from $8.89 billion to $9.96 billion.
Despite the slight reduction in the debt-to-GDP ratio, concerns linger about the country’s ability to manage its debt effectively. The Minister of Finance, Matia Kasaija, defended the government’s borrowing, citing the need to finance the budget for the financial year 2023/24 amidst national and global challenges. He emphasized that the government adheres to principles of prudent and sustainable debt management.
In addition to addressing the rising debt, the government aims to control inflation. Headline inflation showed a downward trend in the first half of the financial year 2023/24, dropping from 3.9% in July 2023 to 2.6% in December 2023. The government projects that inflation will remain below 8% in the medium term, aligning with regional convergence criteria.
While the government reassures the public of its commitment to responsible borrowing and inflation control, skepticism remains regarding the long-term implications of increased debt. The effectiveness of fiscal and monetary policies in maintaining economic stability amidst rising debt levels remains a subject of scrutiny and debate.
