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Minister Ajedra warns Ministries on obtaining loans

Minister Ajedra. PHOTO via @UgandaMediaCent

Kampala, Uganda | THE INDEPENDENT | The Ministry of Finance and Economic Planning will stop all ministries and government agencies from signing any Memorandum of Understanding that has finance implications without involving it.

Speaking at the Uganda Media Center while announcing the forthcoming regional conference on public debt management and sustainable economic growth, the state minister for Finance in charge of general duties, Gabriel Ajedra said that some of the loans that ministries contract are bad for the country.

He said on top of having unfavorable terms like in the case of the energy sector where government pays for electricity that power companies produce even when it has not consumed, some ministries like works borrow money when they have no capacity to utilize it. Hence the government ends up paying interest on the loans yet the money continues lying idle.

“We are coming up with guidelines on how any government entity can borrow money. This business of getting loans and then keep the money on the accounts without using it for the purposes for which it was borrowed must stop,” said Ajedra.

According to the several Auditor General’s reports, hundreds of billions are lying idle on government accounts as projects for which they were borrowed stall hence increasing the county’s debt burden.

Uganda’s public debt grew from $ 12.55billion (Shs 46.3 trillion) at end June 2019 to $ 13.33billion (Shs 48.91trillion) by end December 2019. Of this, external debt was $8.59billion (Shs 31.53trillion), while domestic debt was $ 4.73billion (Shs 17.38trillion). This represents an increase in nominal debt to GDP from 36.1% in June 2019 to 36.97% in December 2019.

Ajedra said that basing on the recent Debt Sustainability Analysis (DSA) report 2019, the nominal total public debt is projected to increase to 40.9% of the GDP in the financial year 2019/2020 before peaking at 49.5% in the 2023/2024 financial year.

“Government will continue borrowing cautiously with priority being given to those projects that are growth drivers and are identified in the National Development Plan strategic direction as key projects,” said Ajedra.

The three day regional conference that is scheduled to take place from February 26 to 28 at Speke Resort Munyonyo will be attended by Sub- Saharan African Countries to discuss how to have sustainable public debt management and strengthening economic growth.

It will be attended by senior government officials and a wide range of experts and stakeholders, including bilateral and multilateral creditors; representatives from civil society organizations; academia; think tanks and private sector actors.

“These discussions on current challenges and trends on debt financing, will provide a platform for a regional joint position through exchange of ideas, perspectives as well as identifying policy options and follow-up actions to tackle shared challenges,” said Ajedra at the conference.

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