The latest Auditor General’s report for the financial year ending June 30, 2023, reveals that Uganda’s public debt is growing at a faster rate than its Gross Domestic Product (GDP). The report, presented to the Speaker of Parliament, Anita Among, by Auditor General John Muwanga, indicates concerns about the sustainability of the country’s debt.
As of June 30, 2023, the total public debt amounted to 96.16 trillion Shillings, consisting of 43.69 trillion domestic debt and 52.47 trillion external debt. This reflects an increase of 9.3 trillion compared to the 86.83 trillion public debt recorded on June 30, 2022. Over the past five years, the public debt has shown consistent growth, increasing by 107 percent from 46 trillion in the financial year 2018/2019 to 96.16 trillion as of June 30, 2023.
The Auditor General’s report highlights that despite the GDP growing from 132.09 trillion in the financial year 2018/2019 to 184.89 trillion in the financial year 2022/2023, a rise of 52.8 trillion, the public debt is expanding at a higher rate than the GDP. The Debt to GDP ratio decreased slightly from 53.4 percent to 52.7 percent between the financial years 2021/2022 and 2022/2023, but it remains above the recommended threshold.
For sustainable debt management, the International Monetary Fund (IMF) suggests that a country’s debt should not exceed 50 percent of its GDP. The Assistant Auditor General, Edward Akol, attributes the debt increase to elevated government expenditure compared to domestic revenue, mainly to finance the fiscal deficit.
The external debt growth, according to the audit report, is largely driven by the need to support the budget, especially budget support. The report warns that if not checked, the servicing of public debt may become unsustainable in the short and medium term.
The rise in domestic debt is linked to increased borrowing to support the economy during the Covid-19 pandemic and address the negative social and economic impacts. It is also attributed to support the economy amid global conflicts, such as the Russia-Ukraine war.
The Auditor General’s report emphasizes that the increasing government debt without a corresponding growth in domestic revenue strains the government’s ability to repay the debt and deliver services to citizens. Akol advises the government to review and strengthen interventions to move towards self-sustainability.
Speaker of Parliament, Anita Among, welcomed the public debt review, acknowledging its importance in reducing the country’s debt appetite.