Improving Public Debt Management

In the OIC Member Countries

4.1.4

Republic of Uganda

A) Public Debt Dynamics

Between 2006 and 2007, the general government gross debt of the Republic of Uganda

decreased from 31.7% of GDP to 19.6% of GDP (see Figure 410), which can be attributed to

delayed effects of the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral

Debt Relief Initiative (MDRI), which started in 1998 (IMF 1998).

In 2009, Uganda’s debttoGDP ratio began to increase steadily from 19.2% to around 35.6% in 2015, which was mainly

attributed to borrowing used to finance public investment projects (IMF 2015b). Contingent

liabilities constitute about 13.7% of GDP (MEFMI 2015). Projections show that the general

government debt level will further increase to around 40.2% in 2017. The IMF, however,

forecasts that Uganda’s general government debt distress will remain manageable in the future

as it is expected to remain well below precarious benchmarks (IMF 2015a).

General government net lending balance has always been negative since 2006. Reaching a level

of 5.6% of GDP in 2010, net borrowing reflects funding of infrastructure investments (IMF

2015a). As a result of tightened spending control measures and improved revenue collection,

the net borrowing balance decreased to around 3.0% of GDP in 2015 (IMF 2013, 2015).

Beyond 2015, however, net borrowing is expected to increase to 4.4% of GDP in 2016 as a

result of scheduled public investments. In particular, the authorities plan to continue

upgrading the infrastructure network, which is mainly funded by nonconcessional borrowing

(IMF 2015b). The investment package is expected to include expenditures on hydropower

plants, transmission networks, roads and pipelines in preparation to the envisaged

commencement of largescale oil production (IMF 2015b). Major creditors are the China EXIM

Bank, the Japan Bank for International Cooperation, and the Islamic Development Bank (IMF

2015b). Net interest payments have increased steadily from around 1.1% in 2006 to 1.8% in

2015, a trend which is expected to continue.

Total MDRI support released in 2005/06 and 2006/07 totaled to $3.6 billion (IMF 2008).