Ggoobi defends govt plan to borrow more money 

Ramathan Ggoobi, the permanent secretary in the ministry of Finance, Planning, and Economic Development, revealed that the increased domestic borrowing is aimed at financial stability and funding development programs.

Ggoobi was speaking at the post-budget dialogue organised by Absa Bank, Deloitte, among other private sector players recently. According to the 2024/2025 budget, government will borrow Shs 8.968 trillion from the domestic market compared to Shs 3.2 trillion acquired in the current financial year that climaxes at the end of June.

The ministry of Finance indicates that Uganda’s total public debt stood at Shs 93.38 trillion ($24.69 billion). External debt was Shs 55.37 trillion ($14.64 billion), while domestic debt was Shs 38.01 trillion (Shs 10.05 billion). The public debt is projected at Shs 97.638 trillion, equivalent to $25.716 billion by June 30, 2024.

“We are going to borrow Shs 9 trillion. Some people were saying, it is not that much money that the government is taking. No, we don’t just say, let us borrow this; we first model and find out how much we have in the domestic market,” Ggoobi said.

He noted that “commercial banks have Shs 27 trillion. They are sitting on a mountain of money. I don’t know why they don’t want to lend to you at the rate of Uganda Development Bank.”

He added: “If we don’t enter that market, most of the commercial banks or our financial sector will be in trouble. So, we are taking this money from a balanced point of view; we are mindful of the crowd-out effect. We don’t want a financial crowd-out. Therefore, we take excess money from the market,” he noted.

Mumba Kalifungwa, the managing director of Absa Bank Uganda, said the financial year 2024/25 national budget represents a crucial milestone in Uganda’s economic development, setting the tone for fiscal policy and outlining the government’s revenue and expenditure priorities for the coming year.

Mumba commended the government for its commitment towards driving economic growth and fostering an environment that supports sustainable development. Uganda’s economy has remained resilient and is projected to grow at 6 per cent, albeit with a slow-down in quarter-on-quarter growth.

“From a global perspective, uncertainty remains about the impact of geopolitics, international commodity prices, weaker global growth, global inflation, and monetary policy responses on our economy,” he said.

He emphasised the importance of public-private partnerships in driving Uganda’s economic growth. Together, we can create an enabling environment for economic growth, innovation, and financial inclusion.