Budget analysts warn gov’t against poor debt management
KAMPALA, February 11, 2025 – National budget analysts, led by the Civil Society Budget Advocacy Group [CSBAG], have issued a warning to the government regarding poor debt management and associated inefficiencies.
This warning follows reports highlighting concerns over Uganda’s increasing public debt, which is reportedly plagued by significant issues related to loan management and the underutilisation of funds. These inefficiencies are exacerbating the country’s fiscal challenges.
During a media briefing in Kampala yesterday, CSBAG referred to a recent audit report released by the Auditor General, which identified at least 13 areas of poor debt management across various sectors, including education, infrastructure, water and environment, energy, health, and agriculture.
The report also drew attention to serious shortcomings in the implementation of the Parish Development Model [PDM] and the misuse of supplementary funding.
According to the Auditor General, the country’s total loans disbursed in the 2023/24 financial year amounted to Shs 1.89 trillion, a 12.9 percent increase compared to the previous year. Additionally, Uganda paid a total of Shs 73.9 billion in commitment fees to lenders due to poor debt management, highlighting the country’s inability to absorb loans in a timely manner.
Between 2018 and 2024, the government reportedly paid Shs 469.8 billion in commitment fees as a result of high levels of undisbursed loans, while at least Shs 2.82 billion remains unused across 17 different government loans. These included significant projects such as the Mbarara-Masaka Power Transmission Line, which had EUR 34.888 million [Shs 146.53 billion] in unused funds, and the Kampala City Roads Rehabilitation Project, with USD 165.843 million [Shs 630.2 billion] remaining unspent, despite the expiration of the project timelines.
The Auditor General cautioned that the escalating costs of servicing these loans threaten the country’s fiscal stability, as the debt has exceeded the 12 percent target set by the Charter for Fiscal Responsibility [CFR]. The inefficiencies in loan utilisation pose a serious risk to Uganda’s economic stability.
The report also noted significant losses in revenue collection, particularly from mining companies. In the 2023/24 financial year, the government failed to collect taxes on gold exports, levies on licensed radio and television stations, mineral rent fees, and had issues with incorrect tax classifications. These shortfalls have undermined the government’s ability to generate sufficient revenue for national development.
At least Shs 11 trillion was lost due to uncollected taxes from gold exports, while Shs 439 billion was lost in unpaid mineral rent fees by June 2024. A further Shs 306 million was lost from uncollected levies on licensed radio and television operators.
The Auditor General also highlighted procurement irregularities, revealing that goods and services worth Shs 1.22 trillion were procured in violation of public procurement and disposal regulations.
The report notes that the Kampala Metropolitan Transmission System Improvement Project only saw a 16 percent disbursement rate for donor funds, while government funds stood at 89 percent. It also highlighted questionable expenditures, such as Shs 4.134 trillion spent by 11 district local governments with missing documents, contractual breaches, and incorrect payments.
Additionally, Shs 4.32 billion remains unaccounted for by the Electoral Commission, and Shs 4 billion is unaccounted for by the Uganda Bureau of Statistics.
Delays in payments and failure to meet contractual obligations have resulted in financial penalties, including Shs 27.66 billion in interest charges for the Uganda National Roads Authority [UNRA]. “This underscores the government’s critical failure to effectively plan and execute budgetary obligations,” said Julius Mukunda, Executive Director of CSBAG.
The Auditor General also expressed concerns about the misuse of supplementary budgets. The report revealed that while the initial planned budget was Shs 52.73 trillion, it was later revised to Shs 8.93 trillion due to supplementary requests. However, the country’s actual expenditure stood at only Shs 48.68 trillion, revealing a significant discrepancy and suggesting that the supplementary funding was unnecessary.
“Such discrepancies undermine the integrity of the entire budgetary process and the officials responsible for planning the country’s finances,” Mukunda added.
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