Uganda downplays debt load

Uganda said earlier this week its ballooning public debt was sustainable and that it would borrow with care in the future. It dismissed concerns from the central bank and the government’s auditor that growing indebtedness posed risks to the economy.

The country’s appetite for credit has accelerated over the past decade, fuelled by leader Yoweri Museveni’s plans to expand transport and energy infrastructure. But critics say the escalating borrowing could spark a crisis along the lines of those the country experienced in the 1990s and early 2000s before the World Bank forgave loans.

“The risk for government defaulting on debt repayment is non-existent,” Finance Minister Matia Kasaija told a news conference in the capital Kampala. However, future borrowing would be done “cautiously and selectively” to avoid potential risks. As of June, Uganda’s total public debt stood at 41.5 per cent of GDP, Kasaija said.

The central Bank of Uganda, however, said last year the debt stock, including credit agreed but not yet disbursed, topped 50 per cent of GDP. The bank expects the economy to grow six per cent in the year to June.

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