Uganda is planning to borrow 600 million euros ($661 million) to wad a hole in its 2019/2020 budget.
The East African country will be looking to international banks since its domestic revenue collections fell short by 9%, during stalling in implementation of some planned tax-generating measures.
Already, there is a mounting debt pile which the IMF has warned that it could exceed 50% of her gross domestic product in 2021/2022.
In a report by Reuters, Uganda’s Finance Ministry explained in documents posted on their parliament’s website that the government planned to borrow the funds from the Regional Trade Development Bank and the local unit of South Africa’s Standard Bank.
In October, Bank of Uganda (BoU) Governor Emmanuel Tumusiime-Mutebile had said that too much the dependency on oil revenues pushed Uganda to go for more expensive loans to finance infrastructure projects, a precursor for the much dreaded ‘oil curse’.
According to Ministry of Finance data, of June 2019 Uganda’s public debt had risen to $12.2 billion from about $9.4 billion in 2017.
The speedy increase in debts has sparked repayment concerns within the economic circles, even as the government rises in defiance as financial experts cite serious financial risks tied to new borrowings.
The increased payments were worsened by dwindling tax revenue growths and limited economic benefits linked to some infrastructure projects.
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