Uganda’s Ministry of Finance has announced that the country’s public debt is expected to enter a “declining trend” due to projected strong economic growth of 7%, starting in 2025 when oil production is set to begin.
The Ministry has expressed concerns over the growing public debt and surging debt-servicing costs, with similar concerns expressed by the central bank and others. To ease these debt problems, the ministry has stated that it will not conduct any external borrowing in the new financial year starting in July.
Ramathan Ggoobi, the Uganda finance ministry’s top Treasury official, noted that economic growth will be primarily driven by activities in the oil and gas sector, with real GDP growth projected to increase to over 7 percent at the start of commercial oil production. The country plans to start pumping crude oil in 2025 from fields in the west of the country near the border with the Democratic Republic of Congo.
In October, the country’s total public debt stood at approximately $21 billion, equivalent to slightly less than 50% of the country’s GDP, according to the central bank. While the projected economic growth is expected to help Uganda’s debt problem, concerns remain over the sustainability of the country’s borrowing and debt-servicing costs.
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