New report reveals African debt burden, tips on how to overcome

Economic analysts believe that this should be based on radical renegotiations with the World Bank and the International Monetary Fund.

According to the paper titled 'Fifty Years of Failure: the IMF, Debt, and Austerity in Africa,' which is based on fresh research from Uganda and nine other African countries, eight out of ten African governments are in debt difficulty and have been instructed to cut or freeze public sector salary bills.

The Quality Assurance Manager at the Uganda Debt Network, Gilbert Musinguzi, emphasised the importance of better reforms to address the IMF and World Bank's terrible policies imposed on African countries.

“When the government is asking for a loan, it gives a clear feasibility study and indicates how prepared they are. They also indicate how they are able to contribute the matching fund, but when the time comes, you find that the Government does not have the matching fund. But now, you are reaching almost the end of the debt period before implementing the project and end up defaulting,” Musinguzi said.

Uganda was owing lenders a massive sh88.9 trillion by the end of June 2023, over twice the sh52.7 trillion budgeted for fiscal year 2023/2024.

According to the Ministry of Finance, Planning, and Economic Development, Uganda’s public debt stock increased from $19.54 billion (sh69,512.5 billion) in financial year 2020/21 to 20.99 billion (sh78,833.4 billion) in financial year 2021/22.

This represents a much smaller increase in public debt compared to the previous two financial years. External public debt increased from $ 12.39 billion (sh 44,061.4 billion) to $12.82 billion (sh 48,171.8 billion) between June 2021 and June 2022, while domestic public debt increased from $7.16 billion (sh 25,451.1 billion) to USD 8.16 billion (sh 30,661.6 billion) over the same period.

As a share of GDP, public debt increased to 48.4 percent in June 2022 from 47.0 percent in June 2021. Measured in present value terms, the stock of public debt amounted to 39.5 percent of GDP, up from 37.5 percent the previous financial year.