KAMPALA, Parliament's Budget Committee has raised a red flag regarding the rate at which Uganda's government is borrowing, arguing that it is beyond its means.

The committee, chaired by Ntenjeru North MP Amos Lugoloobi, says it has a strong view that the current public debt situation for the country is unsustainable, as evidenced by the fact that out of the total resource envelope of 28.8 trillion shillings (about 8.93 billion US dollars), only 12.9 trillion will be available for discretionary spending. The balance of 16 trillion is earmarked for debt serving and project support.

Lugoloobi explained that the situation made the country highly vulnerable to the extent that the budget can no longer adequately provide for education, health services, recapitalization of vital enterprises, financing productive sectors and the local governments.

These observations are contained in the Committee's report on the 2017/2018 budget.

According to Uganda Debt Network, Uganda's public has reached 11 billion USD and it is soon expected to exceed the amount of money in Uganda's economy with the implementation of the Standard Gauge Railway on a loan of 12.5 billion USD from the Exim Bank of China, the oil refinery which is $4b and the oil pipeline which is also estimated at $4b. Uganda's economy is only $25b.

Whereas Uganda's debt to GDP ratio is 35%, the tax to GDP ratio is only 13%. This implies that unless government gets new sources of revenue, its small tax base cannot enable to pay back the soaring public debt.

The budget that goes to debt repayment has been rising from sh6.5trillion in 2015/2016 to sh7.7trillion in 2016/2017 and finally to sh9.9trillion for the 2017/2018 budget which was read last week.

Parliament recently directed the executive to present a comprehensive on the country's public debt and how it has been utilizing the money. The report is yet to be presented.

The latest Auditor General's report revealed that a total of s8trillion money borrowed by government is lying idle as the country pays more interest and commitment charges on such loans, making it more expensive than originally envisaged.


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