Uganda lacks an effective fiscal anchor – IMF

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The International Monetary Fund -IMF in a statement said, that the Pearl of Africa’S  projected debt path in successive budgets has been revised upwards since the beginning of the infrastructure scaling up drive.

In 2013, debt was targeted to peak at 31 percent of GDP, in 2016 at 44 percent of GDP, and currently debt is projected to peak at 49½ percent in FY21/22. At the same time, capital investments have been lower than planned. Because of the deterioration in debt metrics, the budget now spends one in five shillings collected in revenue on interest payments.

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To counter further increases in projected debt and provide a buffer against shocks, the authorities could set an operational debt ceiling of 50 percent of GDP in nominal terms. This ceiling would then determine the annual budget deficit and define a binding expenditure envelope. This framework could guide fiscal policy until oil production starts at which time the authorities plan to adopt a fiscal rule for managing oil revenues and their inherent volatility, IMF – advised.

See also: Uganda’s growth forecast to rise – IMF

There’s notes of ongoing work to develop the 2019-2024 Public Debt Management Framework which the authorities believe will help them keep debt at sustainable levels.

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