“Uganda is not spared from this. Yields on government securities peaked at 12-15 percent early in 2023 and the Uganda shilling has depreciated. Difficulty in raising concessional financing, coupled with a higher interest burden, means that fewer resources are available for discretionary spending, notably on development and climate change adaptation,” Ms. Karpowicz said.
She insisted that the best course of action for the Ugandan government is boosting tax revenues, which are below regional competitors. In her assessment, this move is not only necessary but can also help finance development investment while preserving governmental debt sustainability.
Additionally, Dr. Adam Mugume, the Executive Director of Research at the Bank of Uganda, identified the challenge Uganda’s reliance on external financing poses, stating that this constitutes a problem as it complicates the global financial squeeze.
He stated; “However, Uganda should be able to maneuver through given that most of Uganda’s external debt is from multilateral creditors, mainly World Bank, IMF, and African Development Bank. Uganda’s exposure to non-concessional loans is to a great extent limited and as such there is limited concern on risks associated with rollover of maturing loans from commercial lenders.”
