By Johnson Kanyesige
The latest report by the Auditor General has indicated an increase in Uganda’s external debt by 2.2 percent, from 53.19 trillion to 54.37 trillion Shillings.
According to Auditor General, Edward Akol, the increase is primarily driven by the borrowing from multilateral creditors, which has expanded from 33.06 trillion to 35.15 trillion Shillings.
Akol on Wednesday presented the financial year 2023/2024 audit report to the Deputy Speaker of Parliament, Thomas Tayebwa.
“While we have seen some positive trends notably a 9.9 percent reduction in commercial bank debt from 7.15 trillion to 6.44 trillion, and a modest decrease in bilateral debt from 12.98 trillion to 12.77 trillion, there is still the risk of compromising the fiscal sustainability and constraining the country’s ability to fund essential domestic programs,” Akol noted.
He noted that as the country prepares to implement the National Development Plan – NDP IV, the medium-term debt management strategy must be reviewed and strengthened to reduce reliance on debt and ensure sustainability.
Meanwhile, the Auditor General has also reported the continued payment of high commitment fees, which are charged by lenders. According to Akol, the commitment fees are associated with unused credit lines or undisbursed loans.
“I noted an increase in undisbursed loans amounting to 1.890 trillion Shillings representing a 12.95 percent increase from the closing balance of 14.6 trillion in financial year 2022/2023 resulting in payment of commitment fees totalling 73.9 billion Shillings. This is a cost of government inefficiency as funds remain unutilized leading to increased cost of servicing debt,” reads highlights in the audit report.
According to the Auditor General’s report, the Ministry of Finance explained that the government is implementing a Project Implementation Management System (PIMS) to ensure project readiness and improve the absorption of funds.
“Government should identify and resolve all bottlenecks hindering the smooth implementation of projects or programs and activities to increase its loan or debt absorption rates,” Akol advised.
