Government must reduce borrowing rate

Recently, there was a story in the media about a report by the Parliament’s Committee on National Economy 2016/2017 financial year that Uganda needs 94 years to clear its debt. According to Bank of Uganda, each Ugandan is expected to pay Shs992,500 to clear this debt. How realistic is this when according to the Uganda Bureau of Statistics, poverty levels in Uganda have risen from 19 per cent to 27 per cent in the last five years.

This implies that the biggest percentage of Ugandans are living below the poverty line of $1 a day. The question is, how has this accumulated debt benefited ordinary Ugandans when most of them are trapped under poverty line? Is this how Uganda will achieve its Vision 2040?

A lot of money has been borrowed and invested in the oil and electricity sector, which lack transparency and provide no value for money. Oil will not benefit Ugandans given the rate at which the country is borrowing to finance these projects.
Worse still, these borrowed monies are later embezzled by some officials hence the accumulated serve its intended purpose.
Huge debts will compel government to shift funds from provision of basic services that would help boost job creation, gender opportunities, education, health, roads, clean water and others to servicing of debts for projects that are lacking in transparency, equity and provide no value for money.

Further, debts must be managed with maximum transparency and must remain within the IMF recommended figures of less than 52 per cent of a country’s Gross Domestic Product (GDP).
The report put the stock of external debt of both public and private sector at between 40.2 per cent to 41.4 per cent of GDP.

Already in the current financial year, government will spend 35 per cent (Shs9.9 trillion) of the national Budget on debt servicing at a time when social service provision is at its worst.
The rising public debt pushes government to increase taxes and also impose new taxes where the tax burden is felt majorly by poor Ugandans. The government should slow down on the rate at which it is borrowing given the current debt burden.