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Debt servicing revenue rises to 30%, puts pressure on country’s economy – Uganda’s Central Bank

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The central bank in Uganda has revealed that domestic revenue for debt servicing rose to 30% in the year to October from 24% in the same period two years earlier.

The apex bank said the portion of domestic revenues is putting undue pressure on public finances.

The bank said the rising cost of debt repayments meant there were growing “liquidity pressures on the domestic revenues to finance the domestic debt liabilities at the expense of other priority budgetary items.”

Repayments of external debt, which are projected to hit $1.3 billion annually by the end of this financial year, “remains a major strain on international reserves.”

Uganda’s total debt stands at about $21 billion, and is projected to hit 53% of gross domestic product before easing by the fiscal year 2024/25 (July-June).

The World Bank reports that the Ugandan economy grew at 4.6% during FY22, faster than had been anticipated due to an uptick in activity after the economy reopened in January 2022. The new projected growth figure would still be higher than last year’s 4.7% as economic activity picks up.

Uganda has been taking on increasingly large amounts of debt to finance energy, transportation, and other infrastructure with officials banking on expected oil revenue to clear the debt.

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Progress as Kenya’s January 2023 inflation rate slows to 9.0%

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The Kenyan statistics office has revealed that the country’s inflation rate slowed to 9.0% year-on-year in January from 9.1% a month earlier.

The latest inflation figure makes it the third straight month that inflation has fallen in the East African country. The figure hit 9.6% in October, its highest level since May 2017. January’s inflation is still above the government’s preferred band of 2.5%-7.5%.

The statement by the Kenya National Bureau of Statistics shows that on a monthly basis, inflation was 0.2% compared with 0.5% in December.

Inflation inched down to 9.1% in December, the second straight month of decrease, but still above the government’s preferred band of 2.5-7.5%.

Kenya’s central bank on Monday announced a new monetary policy holding its benchmark lending rate steady at 8.75%.

According to African Development Bank, Kenyan economic growth is projected to decelerate to 5.9% in 2022 and 5.7% in 2023, driven on the demand side by a decline in domestic and external demand caused by lower income and by an increase in food and fuel import costs and on the supply side by tepid economic activity across sectors due to cost-push factors.

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Nigeria’s legislature approves extra $2.2 bln central bank loans to government

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Nigeria’s debt crisis isn’t going away anytime soon as the country’s lower house of parliament has approved President Muhammadu Buhari’s request to borrow an extra $2.2 billion.

According to the lawmakers, the approval is in temporary advance from the country’s central bank.

Nigeria’s minister of Finance in December made the revelation that the country will henceforth focus on concessionary loans from the World Bank, Islamic Development Bank, African Development Bank, and others for external loans, Ahmed told Reuters in Abuja after a cabinet meeting.

The legislators plan to discuss with officials in order to turn central bank loans to the government worth 23.7 trillion naira ($52 billion) into long-term debt.

President Buhari asked parliament in December for approval to convert central bank’s temporary advance to government into 40-year bonds at 9% interest to cut interest payments but lawmakers questioned the plan.

Government debt in Nigeria averaged 73641.06 USD Million from 2012 until 2022, reaching an all-time high of 103312.80 USD Million in the second quarter of 2022 and a record low of 48361.37 USD Million in the first quarter of 2013.

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