Uganda said it plans to borrow Sh200 billion or USh6.9 trillion ($1.89 billion) from external lenders in the 2020/2021 fiscal year to partly finance its budget, which could come under pressure as President Yoweri Museveni seeks reelection in 2021.
The funds would be in “form of concessional and non-concessional” credit according to a finance ministry budget paper seen by Reuters yesterday.
The paper did not however, indicate how much was borrowed in the previous financial year. It also did not indicate from who the money would be borrowed.
But going by events of recent years, China has become one of Uganda’s top external lenders.
Mr Museveni, who has been in power since 1986, is widely expected to seek re-election in early 2021. He is expected to face a formidable challenge from musician-turned-politician Robert Kyagulanyi aka Bobi Wine.
As in most counties in Africa, public spending typically surges in election periods in Uganda. This has sometimes triggered pressure on consumer prices and the local currency.
The paper said economic growth in 2020/2021 would be 6.2 per cent, driven by higher productivity in manufacturing and agriculture and “public and private sector investment as well as regional and domestic trade.” This ie even as firms are struggling to stay afloat.
Uganda’s mounting public debt has been fueling concern.
The International Monetary Fund has urged authorities to rein in borrowing.
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