Poor to lose as pub­lic debt rises

The East African - - BUSINESS -

By MICHAEL WAKABI

UGANDA’S POOR are set to bear the bur­den of ris­ing pub­lic debt in 2019 and be­yond, as the pro­por­tion of re­sources al­lo­cated to ser­vic­ing it in­creases.

Fi­nance Min­is­ter Ma­tia Ka­saija was this past week forced to re­spond to con­cerns over the im­pli­ca­tions of Uganda’s debt after the 2017/18 Au­di­tor Gen­eral’s re­port re­vealed it had risen by 22 per cent in the year to June 2018, even as the watch­dog Civil So­ci­ety Budget Ad­vo­cacy Group (CSBAG) warned that this was un­der­min­ing progress on key so­cial com­mit­ments.

Mr Ka­saija ar­gued that at $10.7 bil­lion, pub­lic debt is still man­age­able over the medium to long term.

“Pub­lic debt lev­els are com­fort­ably be­low the in­ter­na­tional sus­tain­abil­ity thresh­old — which is be­low 50 per cent of GDP — and sig­nif­i­cantly be­low the sub-sa­ha­ran av­er­age of 45.4 per cent of GDP,” he told a news con­fer­ence on Tues­day.

In its anal­y­sis of the pro­posed al­lo­ca­tions un­der the Na­tional Budget Frame­work Pa­per for fis­cal 2019/20, CSBAG con­cludes that na­tional debt lev­els are a mat­ter of con­cern de­spite a pos­i­tive eco­nomic growth tra­jec­tory.

At $10.7 bil­lion, Uganda’s pub­lic debt stock was equiv­a­lent to 41.5 per cent of GDP at the end of June 2018. Ex­ter­nal debt com­prised 28.2per cent of GDP while domestic debt ac­counted for13.3 per cent.

The ad­vo­cacy group notes that al­though the pro­posed spend­ing will ex­pand by 4.9 per cent in the 2019/20 fis­cal year, al­lo­ca­tions to key so­cial sec­tors such as health, education, so­cial de­vel­op­ment, agri­cul­ture, wa­ter and en­vi­ron­ment will shrink by 12 per cent. Spend­ing on that clus­ter will fall from Ush 7.7 tril­lion ($2.07 bil­lion) in 2018/19 to Ush6.8 tril­lion ($1.82 bil­lion) in 2019/20.

The al­lo­ca­tion to so­cial de­vel­op­ment will de­crease from 0.9 per cent of the to­tal al­lo­ca­tions in the cur­rent fi­nan­cial year to 0.6 per cent un­der the pro­pos­als for 2019/20. Spend­ing on wa­ter and en­vi­ron­ment will fall from 5.0 per

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