Parliament has adopted a report of the Committee on Public Accounts (Central Government) calling for urgent government action to restructure Uganda’s mounting public debt, which reached Shs97.499 trillion as of June 2023.
According to the Auditor General, this figure represents an over 100 percent increase over the last five years.
This was one of the recommendations contained in the committee’s report on the Auditor General's Report on Treasury Operations and Consolidated Financial Statement of Uganda for the year ending June 2023. Although the report was presented to the House by the Chairperson of the Committee, Hon. Muwanga Kivumbi, on Monday 21 October 2024, its consideration had not been concluded.
The report was adopted on Tuesday, 26 November 2024.
“Government should restructure its debt portfolio to secure cheaper alternatives and reduce obligations. Steps must be taken to reverse the rising debt trend and ensure fiscal discipline by promptly servicing domestic obligations, including interest payments,” he said during the House sitting then.
The committee also highlighted growing concerns over the cost of debt servicing, including commitment fees for unused loans and administrative expenses. The Auditor General reported that Shs112 billion was spent, in excess of approved budget, on commitment fees in 2023.
“The government’s insatiable appetite for borrowing, coupled with escalating debt service costs, is deeply worrying,” Kivumbi said.
The committee further criticised the government for incurring penalties due to delayed payments on maturing debts, and urged the government to promptly settle debts with the Bank of Uganda to avoid unnecessary financial losses.
“The government’s failure to honour its commitments is unacceptable and led to these exorbitant penalties,” he added.
The committee revealed that government is revising its Public Debt Management Framework to include guidelines on financial derivatives, such as debt swaps. The updated framework is expected by December 2024.
As of 30 June 2023, Uganda’s public debt stood at Shs97.499 trillion, comprising Shs44.673 trillion in domestic and Shs52.826 trillion in external debt. This reflects an annual increase of Shs9.329 trillion (10.74 percent) from Shs86.839 trillion in June 2022.
The report attributes the net debt increase to persistent budget deficits, bond switches, foreign exchange losses, and new loans for development projects.
Officials from the Ministry of Finance informed PAC that discussions are ongoing with the Bank of Uganda to revise penalty charges or introduce caps to mitigate their budgetary impact.
