The spread of COVID-19 realities have far-reaching implications. In the case of Uganda, Covid 19 infections currently stand at just above 40,000 out of a population of 44 million people – but its economic aftermath will be long-lasting. The country has already projected a revenue shortfall of 3 trillion Ugandan shillings. Most shocking is that 97 per cent of the country’s domestic revenues for the next financial year 2021/22 will be spent on debt servicing. This is according to the budget framework paper that has been approved by the parliament for the next financial year. With public debt projected to increase in the next few years, debt levels and the subsequent costs to service them are becoming worrying. Worth noting is that debt servicing has remained a key challenge amidst the current crisis. The Government of Uganda has had to forego the much needed domestic resources to fight the pandemic, finance social sector priorities and invest in economic growth and development to repay loans. A case in point for the current FY 2020/21, the Government has projected to spend 12.3 trillion UGX (3.37 billion USD) on debt servicing. This accounts for 65 percent of domestic revenues to be raised within the financial year.
The issue of debt relief and restructuring is now firmly on the global agenda as a measure to resuscitate economies and save the much needed domestic resources towards fighting the pandemic and providing social assistance, especially in the LICs in Africa and elsewhere. The G20 countries through coordination from the IMF and World Bank have put in place a number of initiatives aimed at offering debt relief to low income economies. One of these has been the Debt Service Suspension Initiative _ an initiative aimed at suspending debt repayments for 73 of the World’s low income countries till June 2021. Uganda has been a beneficiary of this initiative and it thus has accumulated savings worth 91 million USD from the initiative/. These however have remained very minimal accounting for only 0.2 percent of the country’s GDP. Likewise, in November last year the G20 leaders approved a common framework for restructuring of debts for 73 of the World’s low income countries (Uganda Inclusive). To date, only 3 African countries have sought debt relief under the initiative with the Ugandan Government still reluctant to take advantage of the initiative. Actually, most African countries in general and Uganda in particular have not yet been able to fully reap the benefits of such debt relief and restructuring mechanisms. This has been as a result of the limited understanding and engagement of concerned stakeholders on this matter.
It is against this background that SEATINI-Uganda with support from OXFAM and DIAKONIA organised a half day stakeholder meeting in partnership with AFRODAD, CSBAG, and UDN on understanding debt relief, restructuring measures and domestic resource mobilisation. The dialogue took place on Thursday 25th February 2021 from 8:30am to 1:00pm at Fairway Hotel, Uganda with other participants joining the meeting virtually.
- To assess Uganda’s current debt portfolio and repayment obligations and its impact on domestic resources mobilisation.
- To analyse the efficacy of the existing debt relief and restructuring initiatives.
- To keep the debt question in the public limelight as one of the current development challenges in Uganda.
- To agree on strategies for engagement on debt relief and restructuring initiatives at the respective national, regional, and global levels.
- To devise strategies to tackle the debt predicament in Uganda.
Stakeholders agree on strategies for engagement on debt relief and restructuring initiatives, as well as strategies out of the debt challenge.