State Minister for Finance David Bahati has dismissed assertions that the Government’s unfaltering appetite for loan funding could worsen Uganda’s debt burden which currently stands at 37.3 percent of the GDP according to International Monetary Finance (IMF) estimates.
“We are very conscious, the country is not put in danger, we are conscious of what we are doing and we are balancing revenue mobilization and borrowing,” he said.
Bahati made these remarks in reaction to the Government’s move to borrow up to 6 trillion shillings in order to address budgetary deficits occasioned by the Corona Virus pandemic.
According to a November 3, 2020 letter seen by Chimp Reports, Government is planning to borrow 600 million USD approximately 2.2 trillion shillings from IMF and raise another 4.3 trillion shillings from domestic financing.
However, speaking to the press on Friday, Bahati refuted talk that such is likely to land Uganda in a tight spot leading it to defaulting on its debt obligations.
“Even if you put everything that we are borrowing now, we still remain below 50% which is the only country in East Africa that is under 50%. The rest of the countries are at 68, 70 and 130 while others are in 200 percent. So Uganda remains conscious about the way we run our debt portfolio,” he intimated.
Furthermore, Bahati explained that the reason Uganda is performing much better regarding this subject largely boils down to the effectiveness of legal checks.
“Five million you come to the house (parliament), one billion you come to the house and so that’s how the law works. Whereas for other countries you give a ceiling and say you go and borrow 3 billion in this financial year and report back at the end of the financial year,” he added.
Most importantly, Bahati noted that such revenues are geared at alleviating the country’s economy which is reeling from months of lock down through improving agricultural production.
“And the sure market that we have like right now we are trading 530 million USD every year with Congo despite the infrastructure that is there. We need to open up those roads so that our Lorries of Goods can be delivered to these cities and people,” Bahati noted.
“What we are trying to do now is to do a combination of both so that you don’t raise too many taxes on the population to stop growth. At the same time, you don’t borrow too much to make the country too highly indebted…we are balancing revenue mobilization and borrowing,” Bahati affirmed.
It remains to be seen whether the minister’s labored explanation shall deflate pummelling public uproar, something National Economy Chairperson Syda Bbumba raised yesterday.
“The blame of borrowing money for different issues is put on MPs. They assume money is borrowed for the financing of politics. You should explain this to the public,” Bbumba disclosed.