The International Monetary Fund (IMF) warns that Uganda’s public debt level may rise to 50.7 per cent of its gross domestic product by June 2022 -an expansion from the projected 42.2 percent of GDP in 2019 as the country continues to borrow for infrastructure investment ahead of planned oil production.
Uganda intends to become a middle-income economy by 2040 and the IMF in its report, says obligations to external lenders may account for more than a third of GDP from 27.7 percent this year.
Uganda’s debt leapt 22 percent to 44.7 trillion shillings, about $11.9 billion in the fiscal year to end-June 2018 as the country borrowed to build roads and hydroelectric dams.
The international lender cautions that some investment projects may not generate the envisaged return, even as interest payments are rising.
Interest payments are projected to take as much as 20 per cent of revenue in 2019-20, a level typically only associated with countries at high risk, or in debt distress.
IMF reports that Uganda, East Africa’s third-biggest economy, whose government projects oil production will begin in 2022, may expand by 6.3 percent in the 12 months through June 2019 and 6.6 percent in 2023-24.