The Minister of Finance Planning and Economic Development Hon. Matia Kasaija has said that Government has implemented a Domestic Revenue Mobilization Strategy to ensure that the public debt remains sustainable and increases Government capacity and less reliance on domestic and external borrowing.
The total debt as at December 2019 amounted to 13.3 billion dollars with external debt amounting to 8.59 billion dollars (62%) while domestic debt amounted to 4.74 billion dollars (35.6%) of total debt stock.
While presenting to Parliament the 45.5 trillion shillings budget for the 2020/21 Financial Year, Kasaija said Government’s approach to public debt financing is elaborated in the medium-term debt strategy for the 5 year period commencing in the next financial year.
“The strategy seeks to contract only affordable external debt in prevalence to domestic debt. The approach to reduce domestic debt in prevalence to external debt is intended to lower the cost of interest payment to 2.2% of GDP compared to 2.6% of GDP,” said Kasaija.
He added, “to ensure that public debt remains sustainable, we implemented Domestic Revenue Mobilization strategy to increase Government capacity to finance programs with less reliance and on Domestic and external borrowing.”
He also noted that he detests borrowing adding that the revenue collected by URA is insufficient to cover all the demands.
In response to the Coronavirus crisis, Kasaija announced that Government has commenced negotiations with some creditors for debt relief to free resources to finance interventions to fight against the pandemic.
The resource envelope for the financial year 2020/21 totals to 45,493.7 billion (45.5 trillion shillings), of which domestic resource amounts to 25,585.6 billion (25.5 trillion), domestic financing amounts to 3,560.3 billion (3.5 trillion) while external financing amounts to 9,515.3 billion (9.5 trillion) and general budget support is 2,906.7 billion (2.9 trillion).
Total expenditure amounts to 37,792 billion (37.8 trillion) of which the current expenditure is 19,787.8 billion and development expenditure is 18,04.2 billion.
The Coronavirus pandemic, Kasaija said, has helped Government to once again demonstrate the economic capacity that Uganda has.
“The budget for the financial year 2020/21 will support the economy to fully recover, harness the potential that we have and get back to our progressive journey to double-digit GDP growth,” he said.
The Government, he added, will support the private sector to scale up production, sustain and increase the volume.