Shs14.3 trillion of govt borrowed money remains unused 

Government makes a number of payments, including commitment fees, on used debt. Photo / File 

What you need to know:

  • The Shs14.3 trillion is, however, a 1.32 reduction from the $3.83b (Shs14.5 trillion) that had remained used in the same period in 2022

The report on Public Debt, Grants, Guarantees and other Financial Liabilities shows that at least $3.78b (Shs14.3 trillion) of borrowed public money had remained unused by December 2023, yet government continues to spend on it in terms of commitment fees payments. 

However, this was a reduction from the $3.83b (Shs14.5 trillion) that had remained used in the same period in 2022.

The report, which the Finance Ministry has presented before Parliament, notes that the stock of undisbursed debt had, however, reduced by 1.32 percent due to increased project implementation.  

Finance  Minister Matia Kasaija noted that government expects to further reduce undisbursed debt due to enhanced project supervision and oversight, while quarterly portfolio reviews will also be key in ensuring the reduction of undisbursed debt. 

The International Development Association (IDA), the World Bank's lending arm holds the largest stock of undisbursed debt at 25 percent, followed by the African Development Bank and International Development Bank (IDB) at 16 percent and 10 percent, respectively.  However, IDA and ADB have seen their stocks reduce by 4 percent and 2 percent in the 12 months to December 2023. 

Parliament appropriated a budget of Shs52.7 trillion to implement various activities during the 2023/24 financial year, which is due to end in June, with revenues expected from domestic taxes and borrowing from the domestic and external markets.

However, in the first half of the 2023/24 financial year, government had secured Shs1.4 trillion from external sources against a target of Shs3.8 trillion, which was mainly due to the lower-than-expected disbursements under projects, delayed commencement of some major infrastructure projects, and lower budget support disbursements. 

Half-year external debt repayments amounted to Shs1.2 trillion, compared to external financing of Shs1.4 trillion, resulting in a net external financing of Shs192.33b as of December 2023.

During the same period, net domestic financing stood at Shs3.161 trillion against a target of Shs1.3 trillion, with the Shs1.8 trillion overshoot attributed to government’s need to cover financing gaps due to delayed mobilisation of external budget support as well as low domestic revenue performance. 

The Finance Ministry also indicated that the 2023/24 fiscal deficit is projected to be lower than the target of 4.6 percent of gross domestic product, and will further reduce over the medium term.