By Jumah Kakomo
The Civil Society Budget Advocacy Group (CSBAG) has raised urgent concerns over Uganda’s increasing public debt, highlighting inefficiencies in loan management and the underutilization of borrowed funds as key factors exacerbating the country’s fiscal challenges.
During a meeting held on Sunday, the group discussed the Office of the Auditor General’s (OAG) Report, released on December 31, 2024. The report covers 13 key areas of debt management, including the education sector, infrastructure, water and environment, energy, health, and agriculture. It also highlights significant issues within the performance of the Parish Development Model (PDM) and the misuse of supplementary funding.
According to the OAG, Uganda’s undisbursed loans for FY 2023/24 surged by UGX 1.89 trillion, marking a 12.95% increase from the previous year. This led to a substantial UGX 73.9 billion in commitment fees, revealing a critical failure in timely loan absorption. CSBAG’s Executive Director, Julius Mukunda, expressed concern over the government’s payment of UGX 469.8 billion in commitment fees between 2018 and 2024 due to undisbursed loans, alongside UGX 2.82 trillion remaining unused across 17 government loans.
The escalating debt servicing costs are another pressing issue. In FY 2023/24, Uganda used 20.99% of its domestic revenue to service debt, far exceeding the 12.5% target set by the Charter for Fiscal Responsibility (CFR), threatening the country’s fiscal stability. CSBAG warns that continued inefficiencies in loan utilization could destabilize Uganda’s economy.
The report also draws attention to troubling investments in private ventures. CSBAG highlighted UGX 930.5 billion invested in private companies without proper procedures, such as the UGX 723.4 billion allocated to Dei-Biopharma Ltd without a valuation report, and UGX 207 billion invested in ROKO Construction Ltd before parliamentary approval. The group criticized the lack of financial oversight and warned that such risky ventures are undermining public finance management.
Procurement irregularities also surfaced in the OAG report, with CSBAG’s economist, Asiimwe Kenneth, noting that goods and services worth UGX 1.22 trillion were procured in FY 2023/24 in violation of the Public Procurement and Disposal Regulations (PPDA). Several government entities failed to confirm fund availability for procurements, leading to delays and affecting the disbursement of donor funds. For instance, the Kampala Metropolitan Transmission System Improvement Project saw only a 16% disbursement rate for donor funds, while government funds stood at 89%.
In the roads and infrastructure sector, CSBAG revealed that by June 30, 2024, the government had UGX 798.97 billion in unpaid arrears for road and bridge construction projects, particularly under the Uganda National Roads Authority (UNRA) and the Ministry of Works and Transport (MoWT). The delayed payments have led to significant financial penalties, including UGX 27.66 billion in interest charges for UNRA, underscoring the government’s failure to effectively plan and execute budgets.
CSBAG calls on the government to urgently address these issues to ensure prudent public finance management and safeguard the country’s economic stability.
