By our reporter
As Ugandan government grapples with external debt repayment, leaving it with limited resources to fight the ravaging coronavirus pandemic and its related negative impacts, financial experts are now calling upon multi-lateral lenders, developed countries and private creditors to cancel all debts advanced to the east African nation.
The experts under the advocacy group, Uganda Debt Network, are also calling for a 10-year action of non-interest on new debts to Uganda and other Low Income Countries’ (LICs), such that the available resource meant for debt repayment is channeled into strengthening health care systems, citizen’s social protection and economic recovery.
Currently, Uganda’s external debt stands at more than US$8.59billion, which translates into slightly above Shs 31.7 trillion, against the current national budget’s Shs 45.4trillion.
While transparency and accountability of the respective governments and state machinery especially in Africa (and Uganda) remain highly wanting and infested with marauding run-way corruption and abuse of public resources led by the political class, a debt cancelation remains most viable for healthcare and economic recovery over the short term in the greater call for social justice in the COVID-19 contextual outfit, said Christine Byiringiro, programme manager at Uganda Debt Network.
The experts, for instance, argue that Uganda paid US$42.8million between January and December 2019 as external debt servicing a lone, which translates into an approximate Shs160billion of estimated Shs19 trillion domestic revenues under the Shs40 trillion total national budget for the FY 2019/20.
The payments were made to the multi-lateral lenders such as African Development Bank, Asian Development Bank, Inter-American Development Bank, International Monetary Fund, World Bank as well as a number of countries including Austria, China, Germany, Japan, France, Kuwait, Saudi Arabia and the United Kingdom.
This development comes four months since the World Bank’s Development committee and the G.20 finance ministers endorsed the Debt Service Suspension Initiative (DSSI) following call by the World Bank and the International Monetary Fund to grant debt-service suspension to the poorest countries of the world effective May.01 to enable them manage the otherwise severe impact of the COVID-19 pandemic.
The DSSI is expected to save up to US$11.5billion to approximately 73 Low Income Countries including Uganda, which is expected to save up to US$95 million (approximately Shs 350bn).
In May this year, President Yoweri Museveni called on international creditors to cancel all of Africa’s debts to ease the economic distress caused by the outbreak of the novel coronavirus.
“The external friends, if they are friends at all, should cancel all the multi-lateral and bilateral loans because this problem (coronavirus) has been created for Africa by Asia,” Museveni said in a speech seen by Reuters. President Museveni, however, did not mention any particular country by name, though the country’s debt has been growing largely as a result of loans from China to finance infrastructure projects.