UG Parliament warns govt against external debts

Invisible · 2008-12-03T04:53:12+00:00

By: Ismail Musa Ladu Kampala The countrys future generations will have to carry the huge debt burden accumulated by the current government if nothing is done to control the surging external debts that stand to attracts high penalty interests, a recent report adopted by parliament disclosed. Presenting a report on the status of the economy as per the last financial year recently, the Chairman national economy committee, Mr Ibrahim Kaddunabbi said debts owed to the non-Paris club creditors such as Nigeria, Libya, India, Tanzania and Abu Dhabi continue to grow while attracting high penalty interests. In a separate interview, Mr Kaddunabbi could not mention the specific figures of the external debts owed to the non-Paris club but agreed that it is (growing at a fast rate) and its repercussions in terms of penalty interests are far reaching to the present and future generations. According to Mr Kaddunabbi the government must come with an agreement on how to pay its debts to the non-Paris club members including Tanzanias un-verified debts which both countries have not reconciled the figures yet its penalty interest is accumulating, something that may cost the country more in future through litigation. The parliament revelation that non-Paris club owes Uganda huge amount of money may jeopardize the efforts made by the World bank to write off 100 per cent Ugandas debt under the Highly Indebted Debt Relief initiatives and the 2006 Multilateral Debt Relief initiative less than five years ago. Important to note is that last financial year Ugandas total foreign aid [both loans and grants] declined to $509.448million from $956.185 the previous year, something that the report attributes to governments gradual plans to move away from external financing. This effort is evident now that Ugandas budget has recently moved from huge donor support to at least 70 per cent domestic revenue support though issues such as misuse of borrowed funds are still rampant. Cases have been sighted such as the fisheries loan to improve the landing sites into modern fishing villages but at the end there was no significant output out of the whole deal, the report reads in parts. As a solution to the widespread misuse of government borrowed resources, the report recommends that government ensures more prudent use of borrowed funds by channeling such resources to wealth creating sectors like infrastructures, energy and value addition among others. In a related development the report also recognised the external trade performance as moderate though largely it remains consumption driven with substantial increase in imports.

Thread starter Invisible
Start date Dec 3, 2008

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UG Parliament warns govt against external debts

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