Because we are being lied to by economic theories, let’s quickly check three simple pieces of national economic data, which clearly indicate debt management incompetence. First, Uganda’s GDP is expected to be at $27b for 2019. Secondly, Uganda’s national debt is at $15b (latest figures for February 2019 from Uganda Debt Network). And lastly, the World Bank says the national debt should not exceed 50 per cent of GDP.
So 50 per cent of the $27b GDP mentioned above equals to $13.5b, meaning we are not supposed to have a national debt that exceeds $13.5b. However, we have already exceeded it because the national debt is mentioned above at $15b as calculated by Uganda Debt Network’s latest figures.
That is $1.5b above the recommended limit, therefore putting Uganda beyond the safe debt-to-GDP ratio of 50 per cent. We are actually now at 55.6 per cent in that ratio, and we are still taking another Shs1.4 trillion loan for a questionable international hospital, which will put us further under a greater debt burden. That is $40m more debt as we speak for that new project yet I hear that there was a more moral request for that amount to be spent in building more than 30 health centres across the country.
Meanwhile, nobody is talking about how to reduce the national debt. Besides, neither Parliament nor Ministry of Finance is showing debt management plan that should be implemented, especially now that the danger of debt-to-GDP threshold has been surpassed. Obviously, the solution is simple: Stop taking new loans. But why do I have the impression that I am giving this free advice to people who have no ears? I have not heard that basic solution being tabled anywhere yet.
As I pointed out before, the problem is not economic. It is the financial indiscipline mentally of a decision-maker behind constant taking of loans without self-control debt management restrictions. I now wonder what economics linguistics anyone will use to try and claim that the country’s debt levels are okay and the fiscal policy tools, which are still maintaining government financing under the acceptable Debt-to-GDP ratio threshold.
If anyone hears anything like that being stated publicly out there, just know immediately that it is just bogus economics linguistics.
Hussein Lumumba Amin