By E K Benj & Aether Wadero
Bank of Uganda (BoU) Deputy Governor Michael Ating-Ego yesterday revealed to legislators on Parliament’s Committee on Finance that Uganda’s public debt now stands at Shs80 trillion.
Mr Ating-Ego was interfacing with the committee after the lawmakers invited him to explain the current double-digit inflation and the deteriorating economic situation in the country.
“Our [total public] debt today is about Shs80 trillion both domestic (Shs33 trillion) and external (Shs47 trillion). But in terms of sustainability, I think we are still sustainable, the only challenge we have is the liquidly indicators, those indicators that you observe in order to assess whether you are able to pay,” Mr Ating-Ego said.
He added: “So if you look at our debt service to revenue collection, it is very worrying, it is about 30 percent. It means for every shilling you collect as taxes, 30 cents goes to debt service, which means you are crowding out other important expenditures such as social and investment expenditures to service the debt.”
As a means of insulating the country’s economy from sliding into difficult situations that could easily stem from highly accumulated debt, Mr Ating-Ego revealed that his office had told the Ministry of Finance that loans to be secured from commercial banks in the near future need to have a grace period of at least five years.
“Because if you look at Bank of Uganda cash rates right now, we have a challenge that the debt service in the next two years is quite big,” Mr Ating-Ego said.
A public debt is government obligation, particularly those evidenced by securities, to pay certain sums to the holders at some future time.
Civil Societies however have expressed concern at Uganda’s increased borrowing and many Ugandans are worried about Uganda’s public debt.
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