(3 Minutes Read)
The Ugandan government will cut all external borrowing by 98% to curb the country’s rising debt, according to the Finance Ministry. The decision comes as the country grapples with rising public debt that has reached an unprecedented level. The ministry also announced significant reductions in government spending and domestic borrowing for the financial year 2025-26.
The Ugandan government will cut all external borrowing by 98% to curb the country’s rising debt, according to the Finance Ministry. The decision comes as the country grapples with rising public debt that has reached an unprecedented level. The ministry also announced significant reductions in government spending and domestic borrowing for the financial year 2025-26.
Overall spending will be slashed by more than 20%, as well as reduce domestic borrowing through Treasury bonds by 54% in the next financial year to alleviate debt pressure and prevent a crisis. The decision comes as the country grapples with rising public debt, which rose to USD 25.6 billion in June from USD 23.7 billion the previous year, according to ministry data.
As of 2023, Uganda’s public debt had reached an unprecedented level, accounting for 52% of GDP. The escalating public debt has raised public concerns about a potential full-fledged debt crisis if immediate urgent is not taken to reverse the current trend. Although the government claims the borrowed funds were used to boost economic growth, the surge in public debt has resulted in credit rating downgrades.
The size of the economy has expanded to about USD 53 billion, and foreign direct investments have grown impressively because of good economic management, among our priorities is to ensure that the huge public debt doesn’t affect economic growth, he said. Fiscal consolidation is on track, among the many ways to sustain debt is to make sure the economy grows.
Read Also:
https://trendsnafrica.com/uganda-rolls-over-treasury-bills/
The World Bank’s International Debt Report recently stated that record debt levels, combined with high interest rates, have put many countries on the path of crisis. The report further notes that every quarter that interest rates stay high, results in developing countries becoming distressed – and facing the tough choice of servicing their debts or investing in public health, education or infrastructure.
