Uganda’s outstanding public debt reached USD 10.53 billion as at March 2018 of which USD 7.18 billion is external and USD 3.35 billion is domestic, Finance Minister Matia Kasaija has said.
“The ratio of Public debt to GDP now stands at 38.1 percent in nominal terms,” said Kasaija, adding, “This is much lower than the threshold of 50 percent beyond which public debt becomes unsustainable.”
Kasaija made the remarks on Thursday while reading the national budget for the year 2017/18 at Kampala Serena Hotel.
Critics and the central bank have previously warned government against excessive borrowing.
Bank of Uganda Governor Tumusiime Mutebile this week said government must be “very cautious” in its public borrowing to avoid mistakes made by several countries in the region facing a risk of debt distress.
However, Kasaija said Uganda’s “public debt is therefore sustainable over the short to medium term, even when we include the financing required for priority projects in the pipeline.”
The pipeline is expected to cost a staggering $3bn. It is hoped construction works will commence in 2019.
With the Medium Term Debt Strategy, Kasaija said the borrowing strategy is to contract concessional loans while restricting commercial loans to the financing of infrastructure and self – financing projects.
“This will help to ensure long term debt sustainability,” he observed.
Economic output is estimated to grow by 5.8 percent during this financial year, higher than the performance of 3.9 percent last year.
Kasaija said the size of the economy is now Shs 101.8 Trillion equivalent to USD 27.9 Billion.
The Services sector grew at 7.3 percent compared to 5.4 percent last financial year.
Kasaija said this performance was mainly as a result of improvement in the financial, Information and Communications and trade subsectors.
The Industrial sector expanded by 6.2 percent compared to 3.4 percent last financial year due to good performance in construction and agro-processing, and recovery in the Mining and Quarrying sub-sectors.
The Agriculture sector growth doubled during the year to 3.2 percent compared to 1.6 percent last year.
Kasaija said the improved performance was mainly due to better weather conditions, control of pests and diseases and targeted Government interventions, particularly seed distribution and provision of better extension services.