Kampala. The decline in short term government papers has forced offshore investors in government securities to shift to long term securities (Treasury Bonds), according to Ms Mary Katarikawe, the Bank of Uganda executive director operations.
In an interview, Ms Katarikawe told Daily Monitor that whereas offshore investors are still active in government papers, most of them have shifted to Bonds as opposed to Treasury Bills.
“The offshore investors now prefer investing in Treasury Bonds as opposed to investing in Treasury Bills,” she said.
The shift indicates that high net worth investors could be increasing given that it is more costly than investing in Treasury Bills.
However, offshore investment in Treasury Bills has high returns, high tax benefits in countries where withholding taxes are low, asset protection, and privacy.
In Uganda, offshore investors have been attracted by high yield (returns) they are getting compared to the rates on other government securities in developed economies and emerging markets economies.
Ms Katarikwe said in total offshore investors now hold 7 per cent of Uganda government securities, which translates to Shs1.8b.
The government has been borrowing from the public through Treasury Bills and Bonds to finance its fiscal deficit.
In this financial year ending June 30, 2019, government has budgeted to borrow Shs1.8 trillion through Treasury Bills and Bonds.