SEATINI Uganda and partners hold meeting on Debt Relief, Restructuring and DRM
On 25th February 2021, SEATINI Uganda with support from Open Society Foundations and in partnership with Uganda Debt Network, AFRODAD, CSBAG and Bank of Uganda held a stakeholder meeting on understanding debt relief and restructuring measures and domestic resource mobilization. The multi-stakeholder dialogue was aimed at devising strategies out of the current debt predicament in Uganda.
Jane Nalunga, the Executive Director at SEATINI Uganda, in her opening remarks, noted that the country’s debt stocks shot up in the wake of COVID 19 with the Government taking on more loans to fill her financing gap. “Ush 20.9 trillion of the country’s budget for the next financial year 2021/22 will go to debt servicing. This accounts for 97 percent of domestic revenues to be raised within the financial year”
she noted with caution.
Bank of Uganda’s Executive Director for Research, Dr. Adam Mugume noted that what worries people are the bilateral loans mainly from China, but further explained that these amount to only $3 billion. He informed participants that a bigger chunk of the country’s debts are acquired from external sources, with 69% coming from multilateral institutions, like the IMF and the World Bank. These come with
longer repayment period and low-interest rates.
Julius Kapwepwe, the Programs Director at Uganda Debt Network on the other hand reiterated that the government figures do not give the real picture of its indebtedness. “Items like publicly guaranteed loans, debts owed to local governments or even accrued payments like land compensations and awards by the Uganda Human Rights Commission, are not taken into account.”
Jason Braganza, the Executive Director at AFRODAD cited that the core cause of the debt crisis in Africa is the underutilization of debt relief measures with resources in many cases being redirected towards non-productive investments that are of limited benefit to societies.
Ausi Kibowa, a Policy Analyst at SEATINI Uganda highlighted that the total debt service (both domestic and external debt) for the coming financial year 2021/22 stands at 11. 5 trillion shillings with 10.5 trillion slated for domestic debt servicing of which 7.4 trillion will be debt refinancing. The remaining 1.1 trillion would be spent on external debt servicing.” This highlights the huge magnitude of resources to be spent on domestic debt repayments as compared to external debt, he added. He therefore questioned the concessionality and sustainability of the current domestic patterns.
Atim Grace, a Budget Policy Specialist at CSBAG posed some critical questions that called for reflection “Have we exhausted all avenues to enable us pay our debt? Do we meet the standards for debt relief? At what point shall we start being responsible for our debt borrowing actions?” She later called on participants to critically think on how to engage on measures out of the current debt predicament.
At the end of the dialogue, SEATINI Uganda together with other stakeholders urged Uganda and other African Governments to take full advantage of the current measures on debt relief offered by the IMF and other G20 lenders.