Uganda’s public debt has increased by 22 per cent, rising from Shs 33.99 trillion as at June 30, 2017, to Shs 41.51 trillion as at June 30, 2018, according to the 2018 auditor general’s report.
Handing over the report to the speaker of parliament Rebecca Kadaga, the auditor general John Muwanga said that payment for loans worth Shs 3.9 trillion which are 50 per cent of those he has studied, expires in 2020.
Muwanga said that if the government is to service the loans as projected in the next financial year 2019/2020, it would require more than 65 per cent of the total revenue collections which is over and above the sustainability levels.
“Although Uganda’s debt to GDP ratio of 41 per cent is still below the International Monetary Fund (IMF) risky threshold of 50 per cent and compares well with other East African countries, it is unfavourable when debt payment is compared to national revenue collected which is the highest in the region at 54 percent”, reads the summary of the audit report.
He noted that the interest payments on domestic and external debt during the financial year 2017/2018 amounted to Shs 2.34 trillion, 17 per cent of the total revenue collections, which is above the limit set in Public Debt Management Framework, 2013 of 15 per cent.
“Although absorption of external debt has improved compared to last financial year, I noted some loans with absorption levels as low as 10 per cent and below. An example is the USMID project with over Shs 95 billion (95 per cent) still on the various accounts of Municipal Councils by close of the year, despite various incomplete and abandoned works due to non-payment to contractors,” further reads the summary report.
Another project cited by the auditor general is the Mbarara-Nkenda and Tororo-Lira transmission line, which, he said has delayed for almost 8 years – resulting into the cancellation of the loan by the funder with a disbursed loan amount of $6.5 million.
Muwanga also noted that significant value loans have stringent conditions which could have adverse effects on Uganda’s ability to sustain its debt.
Auditor General reveals Shs 28bn loss in YLP
The auditor general released a new report revealing that government may never recover Shs 28.4 billion disbursed to youth groups across the country under Youth Livelihood Project (YLP).
The AG found that almost 64 per cent of the sampled youth projects, consisting of 71 per cent value of loans, were non-existent and another 25 per cent had reportedly embezzled the funds.
The Youth Livelihood Program is rolling fund project that targets poor youth across the country is implemented by the ministry of Gender, Labour and Social Development.
Ministry of Gender Permanent Secretary Pius Bigirimana with minister of state for Youth and Children Affairs Nakiwala Kiyingi are responsible for this docket.
A total of Shs 231.2 billion was budgeted for the project in financial year 2013/2014 to financial year 2017/2018.
However only Shs 161.1 billion was released for the program resulting in a shortfall of Shs 70.1 billion.
Despite the underfunding of the program, auditors have also faulted the ministry for the manner in which funds have been (mis)managed.
They pointed out that out of the Shs 38.8 billion that was disbursed to 5,505 youth groups in the financial year 2013/2014 and 2014/2015, on average, only 26.7 percent was recovered from the youth countrywide.
“There is high probability that the balance of almost Shs 28.4 billion may never be recovered as almost 64 per cent of the sampled projects, consisting of 71 per cent value of loans were non-existent. Another 25 per cent had reportedly embezzled or diverted the funds,” reads part of the summary audit report.
Meanwhile, out of Shs 18.1 billion recovered from the groups at the time of audit, Shs 16.1 billion had been transferred to the Revolving Fund in Bank of Uganda.