Due to increased borrowing and expenditure to counteract the COVID-19 pandemic on the economy, Uganda’s public debt is projected to hit 47.5 percent of the Gross Domestic Product (GDP) which ( Shs150.267 trillion) in the Financial Year 2020/2021- this is according to a recent report by the Ugandan government
According to experts, the projected rise in public debt implies that the country is not receiving enough domestic taxes to meet an ever-increasing government expenditure and that it also putting a lot of pressure on the government to service the debt.
Speaking at the fourth Economic Growth Forum in Kampala, the country’s commissioner for the macroeconomic department at the Ministry of Finance, Planning and Economic Development, Dr. Albert Musisi, said the COVID-19 pandemic has affected the government’s fiscal position, with domestic revenues far below target while spending needs increased.
Musisi says revenue collections declined significantly especially in the third quarter of Financial Year 2019/2020 due to the pandemic and lockdown policies.
Despite the projected increase in public debt over the years, he expressed optimism that Uganda’s public debt level is still sustainable as it is below the 50 percent threshold.
On May 1, 2019, the International Monetary Fund (IMF) said Uganda remains at low risk of debt distress, even though debt metrics have deteriorated and one in five Ugandan shillings collected in revenue will be spent on interest in FY2019/2020.