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Uganda's public debt to keep rising - IMF
The International Monetary Fund has cautioned Uganda on its ambitious infrastructure investments which are straining the country's debt ratio. IMF projects Uganda's public debt to reach 50 per cent of GDP by 2020 if left unchecked. Steven Kaboyo, the Managing Director of Alpha Capital joins CNBC Africa for more.
Thu, 18 Aug 2016 07:18:47 GMT
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AI Generated Summary
- The IMF has warned Uganda about the strain on the country's debt ratio due to ambitious infrastructure investments, projecting public debt to reach 50% of GDP by 2020.
- Improvements in public finance management have been noted with the implementation of the Public Finance Management Act, leading to better accountability and tracking of spending.
- The IMF recommendation to avoid non-concessional borrowing and the need for careful debt management highlight the importance of sustainable financial practices amid Uganda's economic growth.
The International Monetary Fund (IMF) has raised concerns about Uganda's ambitious infrastructure investments, warning that it is straining the country's debt ratio. The IMF projects that Uganda's public debt could reach 50% of Gross Domestic Product (GDP) by the year 2020 if left unchecked. Steven Kaboyo, the Managing Director of Alpha Capital, recently joined CNBC Africa to discuss this pressing issue. Uganda's public finance management has seen some improvements with the implementation of the Public Finance Management Act. This has led to better accountability and tracking of public spending. The Act has introduced measures such as the treasury account, which streamlines the budget allocation process and requires spending reports before funds are disbursed for the next quarter. While there have been improvements in public finance management, concerns remain about the sustainability of Uganda's debt levels. The IMF has recommended that Uganda refrain from non-concessional borrowing of about 3 billion, highlighting the risks associated with relying on commercial borrowing, especially from countries like China for infrastructure projects. Stephen Kaboyo emphasized the need for the government to carefully manage its borrowing and ensure that it does not exceed sustainable levels. Despite the recent growth in Uganda's economy, with 2020 being a critical threshold, there are lingering concerns about the impact of high debt levels on the country's financial stability. Kaboyo pointed out that while Uganda currently has a low-risk debt profile, it is essential to consider the broader economic context and avoid overreliance on borrowing for development projects. The IMF's cautionary stance underscores the importance of prudent financial management and strategic planning to navigate Uganda's debt challenges and sustain economic growth in the long run.
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