Government has run to commercial banks seeking for USD100M approximately Shs370, 398,880,415Bn in classified expenditure, a move if approved by Parliament will further bloat Uganda’s public debt.
In a proposal presented by the Ministry of Finance, the entity defended the borrowing arguing that the approved 2018/2019 budget is Shs32, 707.82Bn and of this, Shs9, 517,9Trn is to be financed through borrowing of which Shsl,734Trn is from external sources and Shs1,783Trn is from the domestic market.
So far, Shs605bn has been raised in Net domestic Financing leaving Shs1, 178bn to be raised in the remaining auctions in FY2018/19 based on the approved NDF of UGX 1,783bn.
While defending the borrowing, the Ministry of Finance argued: “However, an urgent need has arisen which requires to finance a classified expenditure of USD100M approximately Shs380Bn expenditure was not budgeted for and is a fiscal deficit, since it is over and above the approved budget for this financial year. These funds are required immediately and since they cannot be raised by an increase in tax collection or external borrowing all of which take long to accomplish, hence the request to borrow locally.”
If approved by Parliament, the extra borrowing of Shs380Bn will further increase domestic expenditure from Shs1.783Trn that was approved in the 2018/2019 budget to Shs2.163Trn and further drive up the domestic debt stock to Shs13.386Trn as at end 2017/2018 from Shs5.091Trn at the end of 2011/2012.
With the new borrowing, the domestic debt stock is expected to reach Shs15.549bn as at end FY 2018/19 based on an additional borrowing of Shs380Bn when approved by parliament.