Uganda is set to secure a total of US$568 million loan from three financial institutions, including the African Export-Import Bank (Afrixembank), to finance the national budget.
Lawmakers on Thursday approved the government proposal to borrow the funds despite strong resistance from several lawmakers who raised concerns over the country’s growing debt burden.
Finance Minister Kasaija informed Parliament that €270 million will be secured from Afreximbank while €230 million will be borrowed from the Development Bank of Southern Africa (DBSA) and Ecobank Uganda Limited.
The loan from Afreximbank has an interest rate of 7.33%, while the loans from Ecobank and DBSA carriers are 7.28% and 7.18%, respectively.
The approval comes despite strong resistance from opposition lawmakers who raised concerns over the terms, timing, and purpose of the loans. Opposing lawmakers also cited concerns about Uganda’s rising debt burden and potential legal violations regarding the Public Finance Management Act.
Uganda’s public debt continues to raise significant economic concerns. As of June 2024, Uganda’s total public debt stood at US$25.55 billion (approximately UGX 92.9 trillion), which includes both domestic and domestic debt. The country’s debt-to-GDP is expected to rise to 53.0% in the 2025/2026 financial year.
Last year, Uganda’s increasing debt led to a ratings downgrade. While the government had pledged to drastically cut external borrowing, authorities argue that these additional loans were essential for stimulating the nation’s economic growth.
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