The Secretary to the Treasury, Mr Keith Muhakanizi, has rallied debt-prone sub-Saharan African countries to dialogue regularly and share experiences so as to keep up with the norm of Paris Club and Bretton Woods institutions like the World Bank and International Monetary Fund (IMF).
Mr Muhakanizi was on Wednesday speaking at the opening of the three-day regional conference on public debt management and sustainable economic growth in sub-Saharan Africa.
Mr Muhakanizi said the borrowing countries can benefit from the dialogue and that it is an opportunity to discuss complex issues associated with debt acquisition and management.
“Creditors are accustomed to gathering and sharing knowledge and coordinating their work. Like during IMF and World Bank meetings or in the Club of Paris. We as borrowers can benefit from doing the same,” he said
“The idea for this conference is to come together as a region and share our issues, to ensure that we can navigate this complexity well. We want to make sure we have the best understanding and acquire the best tools to tackle this complexity. On this we can work together. Therefore, we are eager to learn from you, and we hope you can learn from us.”
The conference, the first of its kind in Africa, was co-convened by the governments of Uganda and the Netherlands and the UN Department for Economic and Social Affairs. It was attended by more than a dozen officials and ministers of finance from 16 Sub-Saharan African countries. Representatives from the multilateral and major bilateral creditors were also invited to the discussions.
At the borrowing countries meeting, Mr Muhakanizi said: “Our coordination could even go beyond dialogue to collaboration. Working together closely will be a key theme of this conference. We will not find all the answers over the next three days, but if by being here today we can start a culture of collaboration, we will have succeeded. Debt dynamics will change in the future as they have in the past and I hope we can tackle those challenges together.”
Uganda’s total public debt stock, according to Ministry of Finance, currently stands at Shs48 trillion as of December last year, up from Shs42 trillion.
The debt stock represents a nominal percentage value of 48 per cent as a percentage of GDP, which, remain below the International Monetary Fund (IMF) target of 50 percent and officials insist is manageable.
China ranks as Uganda’s top bilateral lender, overtaking the 22-member Paris Club (of mainly traditional creditors like US, UK, France, Germany, Denmark, and Italy) for both lending and foreign direct investments, followed by France and then the UK, which is financing construction of the Kabaale International Airport in Hoima, and Japan which financed the new Jinja cable bridge.
However, the government has explained that in general, the debt stock is largely from multilateral lenders like the World Bank and the African Development Fund.
Prime Minister Ruhakana Rugunda who was the chief guest, backed Mr Muhakanizi calls for a regional dialogue and explained that opportunities should be tackled as a region.
Bahati explains debt appetite
Junior Finance minister David Bahati explained that while Uganda has shown a strong appetite for debt with a reduction in grants and concessional financing alongside a rise in non-concessional financing including commercial loans many of which are from unsolicited financiers, government faces no difficulty in repaying back its loans.
“Over the past decade, the government of Uganda has borrowed extensively to finance the country’s infrastructure demands. The debt-to-GDP position increased from 19.2 per cent in 2009 to 36.1 percent in 2019. While this is a large increase, it represents the Governments ambition for economic development.