Loan appetite pushes public debt to Shs90 trillion

Uganda’s total public debt increased by 0.8 percent from $23.68 billion (Shs86.75 trillion) in June to $23.86 billion (about Shs90 trillion) in September.

The increase in public debt was on account of increased borrowing for budget and project financing as a result of increasing government expenditure requirements

The Ministry of Finance said in its Quarterly Debt and Statistical Bulletin and Public Debt Portfolio analysis September released on December 14 that of this, external debt constituted 59.51 percent, representing $14.20 billion (Shs53.35 trillion) while domestic debt constituted  40.49 percent $9.66 billion (Shs36.31 trillion).

This represents an increase in both external debt stock and domestic debt from Shs52.21 trillion and Shs34.55 trillion respectively as of the end of June .

“In foreign currency, however, the debt stock reduced slightly from $14.24 billion to $14.20 billion. The increase in Uganda Shilling stock is a result of the appreciation of the dollar currency from Shs3,667.4 per US dollar as at the end of June 2023 to Shs3,757.3 per US dollar as at the end of September 2023,” the Ministry of Finance explained.

The ministry said, on the other hand, domestic debt increased due to additional issuance to fund increasing government expenditure requirements. 

The nominal value of public debt as a percentage of GDP for the period under review stood at 48.5 percent, which indicates an increase from 47.1 percent in June 2023. Of the 48.5 percent, the ratio of external debt to GDP accounted for 28.9 percent and the ratio of domestic debt stood at 19.16 percent.

The increase in nominal debt to GDP ratio is a result of the increased overall debt stock from quarter four FY2022/23 while GDP increase within the same period was not significant.

Similarly, in Present Value (PV) terms, the stock of public debt as a percent of GDP increased from 39.6 percent to 40.8 percent during the same period.

The Ministry of Finance explained that the stock of external debt was reduced from $14.24b at the end of June to $14.20b at the end of September.

However, the nominal stock of external debt as a percentage of GDP increased from 28.35 percent to 28.9 percent during the same period.

The Ministry of Finance said the reduction in external debt stock was on account of reduced disbursement from $1.10 billion to $0.16 billion and an increase in principal payments from $0.13 billion to $0.19 billion during the quarter.   

The Ministry of Finance said during the period, the undisbursed debt reduced from $3.13 billion at the end of June to $2.99 billion at the end of September.

Both multilateral and bilateral creditors during the quarter registered a reduction in the undisbursed amounts from $2.29 billion and $0.82 billion to $2.22 billion and $0.74 billion, respectively.

The decreasing trend of undisbursed external debt over the quarter is attributed to deliberate efforts by the government to ensure the project’s readiness for financing which results in timely project execution and disbursements.

Credit composition: the Ministry of Finance said with a holding of 62.35 percent (8.85 billion) multilateral creditors continue to hold Uganda’s largest portion of external debt stock.

The major multilateral creditors; the International Development Association (IDA), which is the World Bank’s soft window that lends to the world’s poorest countries at zero interest rate, International Monetary Fund (IMF), and African Development Fund (AfDF) hold the largest share of Uganda’s external debt stock equivalent to 42.90 percent ($6.09 billion) of the external debt portfolio.

Other multilateral creditors among others African Development (ADB), Islamic Development (IDB) and the International Fund for Agriculture (IFAD) held 19.4 percent equivalent to $2.76 billion as of the end of September 2023.

Bilateral creditors categorised into Paris Club and Non-Paris Club share 6.21 percent ($0.88 billion), and 18.32 percent (42.60 billion) respectively, while private banks held 13.13 percent equivalent to $1.86 billion)  as of the end of September.

Bilateral creditors are dominated by Exim Bank of China and UKEF holding $2.50 billion and $0.36 billion respectively, while private banks are dominated by Stanbic banks holding $0.78 billion during the same period. 

Overall, Uganda’s largest share of external debt stock was taken up by concessional debt which stood at 52.66 percent ($47.87 billion) as of the end of September 2023 having increased from 52.16 percent in the previous quarter ending June 2023.  

Finance PS weighs in

Writing a forward in the bulletin, the Finance Permanent Secretary, Mr Ramathan Ggoobi, said: “Our steadfast commitment to debt transparency, responsibility, and responsible financial management is reaffirmed in this publication.” The ministry’s delivery of timely, accurate, and comprehensive debt conforms to debt reporting requirements outlined in this public debt management framework as well as the World Bank’s Debt Management Performance Assessment Framework (DeMPA) 2015 and the World Bank’s Performance Policy Action (PPAs) for FY 2023/24.” 

“This quarterly publication is key for dissemination of public debt statistics on external, domestic guaranteed debt to relevant stakeholders including other governments, investors, international financial institutions, and the general public,” he added.