KAMPALA (Reuters) – The Ugandan government will not engage in any external borrowing in the financial year that starts in July to ease debt-servicing pressures, the finance ministry said.
The East African country has been borrowing large amounts to finance energy, transportation and other infrastructure projects, banking on expected oil revenue to clear the debt.
There has been growing criticism from the opposition, and the central bank has warned that debt repayments are crowding out other spending priorities.
“There will be no new borrowing next financial year and this shall continue over the short to medium term so as to minimise … revenues being used to service debt,” the finance ministry said in a budget document seen by Reuters.
Henry Musasizi, state minister at the ministry, told Reuters the document meant specifically there would be no external borrowing.
He added the government also planned to reduce domestic borrowing in the 2023/24 fiscal year.
The finance ministry document said the government aimed to rein in public spending “in view of the current challenging economic environment where economic growth is lower than projected and a rise in our public debt and its servicing costs”.
Cost-cutting measures will include a ban on foreign travel for most officials and a halving of the budget for training meetings, it said.
According to the central bank, the country’s total public debt stood at about $21 billion in October.
Although still sustainable at about 49% of gross domestic product, the central bank forecast it would rise before returning to a government target of 50% of GDP by the end of the 2024/25 fiscal year.
(Reporting by Elias Biryabarema; Editing by Alexander Winning and Mark Potter)