KAMPALA – The International Monetary Fund (IMF) on Tuesday warned that the ratio of Uganda's public debt to Gross Domestic Product (GDP) will rise to 49.5 percent by 2021/22 financial year because of continued large fiscal expenditure by the government.
The international lending body said over the past five years, Uganda's budget has been increasing which has led to an increase in the level of public expenditure. Uganda's total public debt stock (domestic and external), according to a ministry of finance, amounts to 10.7 billion US dollars, which translates to debt ratio to the GDP of 41.5 percent based on the Net Present Value.
The government says this is still below the threshold of 50 percent of the GDP, above which a country faces debt distress.
IMF Division Chief for Africa Department Axel Schimmelpfennig, told reporters here that the rise in debt level will leave Uganda with no room. However, Matia Kasaija, Uganda's minister of finance in January this year said the country's public debt is sustainable in the medium and long term. Kasaija said the money borrowed externally is used to invest in projects that will grow the country's economy further.
He cited infrastructure projects like roads and electricity generation, which were the major bottlenecks to economic development.