AFRODAD, in partnership with Uganda debt network (UDN) fruitfully engaged members of Parliament (MPs) from
the Public Accounts Committee (PAC) on the 16th May 2019 at the Ugandan parliament house. Discussions were centered on the African Borrowing Charter principles and guidelines and MPs eagerly received the information therein. Members, through the Chairman Mr. Nathan Nandala Mafabi, committed to reading the charter and its infographics to understand it deeper and act accordingly. The ruling party policy conference is scheduled on the 23rd and 24th May, and members have already added the discussion on Borrowing Charter on their agenda. AFRODAD and UDN were invited not only to witness their commitment but to also guide further on the same.
African countries borrowed heavily during the 1970s until they hit a debt crisis which was solved by a relief for heavily indebted poor countries. However, debt levels have been rising dangerously again since 2008, with indications of some countries already entering unsustainable indebtedness levels by 2019 with some countries reaching Debt to GNP ratio of 200%. In specific terms, Uganda recorded a government debt equivalent to 36.90% of the country's Gross Domestic Product (GDP) in 2016. Moreover, Uganda’s Debt to GDP averaged 43.18% from 1997 until 2016, reaching a high at 71.50% in 2003 and recording a low at 19.20% in 2009. By Dec 2018, Uganda’s debt to GDP ratio reached 41%. While the Ministry of Finance (DSA Report, 2017) expects the debt to GDP ratio to rise to 47.8% in FY 2020/21, the International Monetary fund (IMF, 2019) Report has warned that Uganda’s public debt is expected to grow to 50.7% in the 2021/22 financial year due to increased borrowing for infrastructure projects. Uganda’s debt has been steadily growing and in FY 2019l20, interest payments will take UGX 2.9 Trillion, ($4769.5 Million) which is 8.5% of the total national budget and the second largest share of the FY 2019/20 budget. The share of non-concessional loans from China has also been rising in recent years.
Another crisis must not happen! Thus, the African Borrowing Charter Initiative seeks to guide governments on borrowing responsibly for sustainable development. Countries should not borrow until repayment hinders it to meet its obligations to citizens.The two organisations, in line with their respective mandates, partnered to launch the African Borrowing Charter to prevent a debt crisis in Uganda whether immediate or in later years. Upon discussions and the launch, UDN and AFRODAD hope that policy makers will take actions to adopt principles of the Charter and implement them in order to guide Uganda accordingly.
After the mentioned engagement, a well attended press conference was held at UDN premises.