Improving Public Debt Management
In the OIC Member Countries
97
39.4% in 2015. This increase reflects the efforts of Uganda to diversify funding sources
through the development of the domestic debt market, which has been accompanied by the
issuance of marketable securities for central bank recapitalization (IMF 2015b). Increasingly,
foreign investors have participated in the domestic debt market. They held around 13% of
localcurrency denominated government securities in 2014 (IMF 2015b). TBills accounted for
34% and TBonds for 66% of the domestic debt stock in 2015.
Foreign borrowingExternal debt consists mainly of concessional longterm loans (MoFPED 2016). New external
public debt commitments have an average time to maturity (ATM) of around 36 years. As of
end 2015, the major external creditor of Uganda is the International Development Association
(IDA), which accounted for 56% of total external public debt (MoFPED 2016). The African
Development Fund (ADF) was the secondlargest creditor with around 21% followed by China
(10%), whose share has increased significantly since 2006 (MoFPED 2016, IMF 2015b). The
International Fund for Agricultural Development held 4% of the external debt, while other
multilateral creditors also accounted for a share of 4%. The remainder consisted of other
bilateral creditors (3%) and the Japan International Cooperation Agency (2%).
The currency composition of external debt, which had remained relatively stable between
2006 and 2014, is dominated by the U.S. Dollar (see Figure 410). Its share accounted for
48.7% of total external debt in 2014. Due to the high share of IDA debt, the share of SDRs
hovered around 20.8%. The remainder consisted of other currencies such as Euro (1.8%) and
Japanese Yen (1.5%).
C) Policy RecommendationsAlthough Uganda managed to improve its legal and institutional framework concerning debt
management, the MoFPED still encounters itself in the process of restructuring. Apart from
bringing this process to an end, it is important to strengthen the revenue side to take pressure
from public borrowing. The tax performance remains improvable. Thus, Uganda is advised to
continue working on an effective tax policy and remove deficiencies in data integrity (IMF
2015a).
In order to improve competition and the growth of the secondary market, Uganda might
introduce a realtime reporting of bid and offer prices, and foster a greater incorporation of
electronic trading (OAG 2015). It is important to broaden investor’s participation by lowering
barriers (OAG 2015).
Domestic arrears are recommended to be considered in the debt management strategy and in
the detection of contingent liabilities (MoFPED 2016). With respect to guaranteed loans,
Uganda is advised to strengthen monitoring and compliance systems to mitigate the risk of
default (OAG 2015).
With respect to the debt portfolio, Uganda might intensify its effort to stay within the set
parameter limits. In particular, the relatively short average maturity of domestic debt and the
relatively high debt servicetorevenue ratio is important to be monitored carefully (IMF
2015a). Moreover, the government is advised to ensure that external public debt does not
exceed 80% and could prefer longerterm debt instruments over TBills to even out the
maturity profile and reduce the risk for refinancing (OAG 2015, MoFPED 2016).