Finance minister says Government working to address public debt crisis

Appearing before the Committee on Presidential Affairs on Friday, July 7, 2023, the Minister of State for Finance, Planning, and Economic Development (General Duties), Henry Musasizi, emphasised the importance of controlling borrowing.

As of December 2022, the country’s total public debt stock stood at $21.74 billion.

"We have made a deliberate decision, as guided by the President, that borrowing should be for specific areas that contribute to the growth of the economy. And the areas are in irrigation, electricity, transport, especially roads and railways, and ICT," he said.

To achieve this goal, the government has shifted its focus towards securing more concessional loans rather than commercial loans.

"Contracting concessional loans allows us to minimise the strain on our finances and create a healthier borrowing environment. It is a crucial step in managing our debt effectively," he said.

In addition, the government aims to curb domestic borrowing, with the ultimate target being to bring it below one percent of the GDP over the medium term, which the minister said is essential to ensuring the stability of the domestic economy.

To enhance revenue mobilisation, the government will enhance the implementation of its Domestic Revenue Mobilisation Strategy.

According to Musasizi, the government has also embarked on controlling and reducing government expenditure.

Regarding the proposed borrowing for the Greater Kampala Metropolitan Area Urban Development Programme (GKMA-UDP) of up to $600 million, the minister said that the borrowing initiative will support a crucial development programme while adhering to our strategies to manage the national debt.

However, part of the $600 million loan has not been approved by the president, according to Musasizi.

The committee chairperson, Jessica Ababiku, tasked the minister to explain why they do not have approval from the President.

She gave the committee one week to provide the President’s letter, stating that they did not want to erroneously approve a loan.

"We shall proceed with what is complete in terms of the approval. We do not know why that was not approved," Ababiku said.

Musasizi pleaded with the committee to process the loan while they waited for the letter from the President.

"On the French loan, the President has yet to give us the letter clearing it. The letter we have is for the World Bank loan. But I am sure next week, the President will clear," he said.