Uganda plans to increase  borrowing cap to US$3bn

The Ugandan government is set to borrow Shs13 trillion (US$3 billion) from both external and domestic markets for the development of several projects.

The money would be used to finance projects between 2024 and 2025. This figure is slightly higher than the originally intended amount. Uganda has insisted on procuring loans despite international sanctions.

The announcement that the Ugandan government plans to borrow Shs13 trillion points to an increase in the original amount it had set out to borrow. Originally, the government had intended to borrow Shs11,5 trillion by the end of the financial year, as seen in the Ugandan newspaper, The Monitor.

The Budget Framework Paper showed that the bulk of the revised loan is set to come from external sources. About Shs8,9 trillion would come from external lenders, while Shs4,1 trillion would be gotten from domestic financiers.

The increase in the new figure stems from revised domestic loans which had been set at Shs3.2 trillion.

The Ugandan government has been borrowing a whole lot more from the domestic market via issuance of bills and bonds. It has also opted to borrow directly from banks, which experts warn could lead to crowdfunding out of the private sector.

The Ministry of Finance had in the past noted that it would maintain domestic borrowing to not more than one percent of its gross domestic products, even though it is currently at two percent.

Debt in Uganda which currently stands at Shs109 trillion remains an issue of significant concern for the people and its government.

Uganda which has been a target for international sanctions owing to its harsh anti-gay laws, has requested loans no less.

Despite the World Bank halting all new lending to Uganda in 2023, the sanction has done very little to deter Uganda’s need to borrow for project executions. The government has also decided to reduce public spending to save its already limited resources. – Business Insider Africa


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