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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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IMF mission concludes 4th loan program assessment in Egypt

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Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

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The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.

 

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