Uganda plans to borrow a total of 500 million euros ($568 million) from three lenders including Afreximbank to finance infrastructure development, Finance Minister Matia Kasaija said.
Lawmakers on Thursday approved the government request to acquire the loans despite resistance from opposition lawmakers who have criticised the country’s growing debt burden.
At least 270 million euros will be borrowed from Cairo-based African Export-Import Bank (Afreximbank), while 230 million euros will be jointly lent by Ecobank Uganda and Development Bank of Southern Africa, Kasaija told parliament.
He did not give a timeline for the borrowing by the Yoweri Museveni-led government.
Rising public debt
Uganda’s total stock of public debt jumped 18% to $29.1 billion last year on the back of increased domestic borrowing, according to the finance ministry.
The rising debt triggered a ratings downgrade last year. The government had promised to cut external borrowing by 98% but Ugandan authorities say these borrowings have been used to drive economic growth.
The World Bank’s International Debt Report last year warned that record debt levels, combined with high interest rates, have put many countries on the path of crisis.
The report further notes that “every quarter that interest rates stay high, results in developing countries becoming distressed – and facing the tough choice of servicing their debts or investing in public health, education or infrastructure.”
