Soaring public debt: President Museveni to approve all loans

by Christopher Kiiza
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economy

President Yoweri Museveni has said he will personally authorise all loans to be borrowed by the government.

His decision comes as a result of the country’s escalating debt, which has necessitated a significant portion of the 2023/24 financial year budget to be allocated towards debt servicing.

During the presentation of the budget for the 2023/24 financial year, Finance Minister Matia Kasaija said that 17 trillion shillings out of the total budget of 52.7 trillion shillings had been earmarked for servicing public debt.

Consequently, this has led to substantial budget cuts across various government ministries, departments, and agencies.

Speaking shortly after the budget reading, President Museveni criticized government officials for unnecessary borrowing, and vowed to approve every loan himself.

“You heard your budget, Ugandans, of 52 trillion. While I support that budget because there is no other solution in the short run, it is important to know that 17 trillion shillings of that budget is to pay debts. He (Finance Minister, Matia Kasaija) talked about it towards the end of his speech, but it should be highlighted. The 52 trillion you are talking about, 17 trillion of it is to pay debts,”  Museveni said.

“Many of these debts were being pushed by the new colonial public servants until recently when I put down my foot and insisted on approving every loan. That is why you hear these loans take time now to be approved, because I insisted I must approve every loan (external loan). Because all this money was not worth borrowing. If you audit it, it was not borrowed for a good purpose,” he added.

Uganda’s public debt stood at 80.8 trillion shillings as at end December 2022. Of this amount, external debt was 47.9 trillion shillings while domestic debt was 33 trillion shillings.

Currently, the country’s public debt stands at 86 trillion shillings, equivalent to around 48% of the GDP.

Public debt is projected to further grow to up to 88.9 trillion shillings by June 30, 2023.

Uganda’s Debt to GDP ratio stands at 48.6%, although government projects it to drop to 48.2% this financial year ending June 2023.

Finance Minister, Matia Kasaija says the reduction is due to the Government commitment to debt sustainability.

The currently 48.6% debt to GDP ratio is slightly below the Government policy target of not more than 50% of GDP and also below the 52.4% threshold provided for in the Charter for Fiscal Responsibility as at end financial year 2023/24.

To address the high appetite for borrowing, Museveni said the country must borrow less, or not to borrow at all.

President Museveni also castigated the tax collector, the Uganda Revenue Authority (URA), saying it collects less revenue than it should be collecting.

“Those URA people, I saw Mr Musinguzi (URA Commissioner General), they are not doing good work. Their tax to GDP ratio of 13% is not serious. In Europe, countries like Holland have a tax GDP ratio of 39.7%.”

President Museveni said the country must learn from the mistakes of the past and perform better.

ALSO READ: Uganda’s Public debt hits UGX 86 trillion

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