Govt addressing public debt crisis - Finance minister
In an effort to tackle the escalating public debt crisis, government has come up with strategies aimed at managing and reducing the nation's debt level.
Appearing before the Committee on Presidential Affairs on Friday, 07 July 2023, the Minister of State for Finance, Planning and Economic Development (General Duties), Hon. Henry Musasizi, emphasised the importance of controlling borrowing.
As of December 2022, the country’s total public debt stock stood at US$21.74 billion.
“We have made a deliberate decision as guided by the President that borrowing should be for specific areas which contribute to the growth of the economy. And the areas are in irrigation, electricity, transport especially roads and railways and ICT,” he said.
To achieve this goal, government has shifted its focus towards securing more concessional loans rather than commercial loans.
"Contracting concessional loans allows us to minimise the strain on our finances and create a healthier borrowing environment. It is a crucial step in managing our debt effectively," he said.
In addition, government aims to curb domestic borrowing, with the ultimate target being to bring it below one per cent of the GDP over the medium term, which the minister said is essential to ensure the stability of the domestic economy.
To enhance revenue mobilisation, government will enhance the implementation of its Domestic Revenue Mobilisation Strategy.
According to Musasizi, government has also embarked on control and reducing government expenditure.
Regarding the proposed borrowing for the Greater Kampala Metropolitan Area Urban Development Programme (GKMA-UDP) of up to US$600 million, the minister said that the borrowing initiative will support a crucial development programme while adhering to our strategies to manage the national debt.
However, part of the US$600 million loan has not been approved by the President according to Musasizi.
The committee chairperson, Hon. Jessica Ababiku, tasked the minister to explain why they do not have approval from the President.
She gave the committee one week to provide the President’s letter, stating that they do not want to erroneously approve a loan.
“We shall proceed with what is complete in terms of the approval. We do not know why that was not approved,” Ababiku said.
Musasizi pleaded with committee to process the loan as they wait for the letter from the President.
“On the French loan, the President is yet to give us the letter clearing it. The letter we have is the one of the World Bank loan. But I am sure next week, the President will clear,” he said.