Uganda said it plans to borrow 6.9 trillion shillings ($1.89 billion) from external lenders in the 2020/2021 (July-June) fiscal year to partly finance its budget, which could come under pressure as veteran leader Yoweri Museveni seeks re-election.
A finance ministry budget paper seen by Reuters on Monday showed the funds will be in “form of concessional and non-concessional” credit.
The paper did not indicate how much was borrowed in the previous financial year. It also did not indicate from whom the money would be borrowed, but in recent years China has become one of Uganda’s top external lenders.
Museveni, in power since 1986, is widely expected to seek re-election early in 2021. He is expected to face a formidable challenge from pop star-turned-lawmaker Bobi Wine, whose real name is Robert Kyagulanyi.
Public spending typically surges in election periods in Uganda, which has some times triggered pressure on consumer prices and the local currency.
The paper said economic growth in 2020/2021 would be 6.2 per cent driven by higher productivity in manufacturing and agriculture and “public and private sector investment as well as regional and domestic trade.”
Uganda’s mounting public debt has been fueling concern. The International Monetary Fund has urged authorities to rein in borrowing.
Some opposition critics have also accused government of front-loading debt before an expected windfall from oil sales. Uganda hopes to commence crude oil production in 2022.
This month, the government said it was planning to borrow 600 million euros ($661 million) from international banks to plug a hole in its 2019/2020 budget after domestic revenue collections fell short by nine per cent.
The shortfall was caused by delays in implementing some planned tax-generating measures, according to the finance ministry.