Ramathan Ggoobi, the Permanent Secretary and Secretary to the Treasury at the Ministry of Finance, emphasized that no country has achieved development by accumulating excessive debt.
He underscored that in the upcoming 2024/25 financial year, the government will prioritize saving and enhancing revenue collection to address challenges, particularly those arising from commercial loans.
Addressing participants at the Review of the Resource Envelope for the 2024/25 financial year workshop in Munyonyo, Kampala, Mr. Ggoobi emphasized providing full support to the Uganda Revenue Authority (URA) to bolster revenue collection efforts and combat tax evasion and avoidance.
During the three-day workshop, which convened stakeholders in revenue mobilization including URA and agencies responsible for non-tax revenue collection, Mr. Ggoobi reiterated that the window for borrowing for the budget has been narrowing.
He stressed that the economy’s growth necessitates a shift away from heavy reliance on commercial borrowing, as development is fostered through savings and increased revenue collection.
“The window for borrowing for the budget is closing every single year. There is no more commercial borrowing for the budget. The economy has expanded, and we must move beyond words and collect more revenue,” he stated, highlighting the government’s strategy to amplify economic growth tenfold within the next 15 years.
According to the Ministry of Finance’s Debt Sustainability Analysis for the 2022/23 financial year, the major debt management challenges are linked to the high debt service burden, partly attributable to an increase in commercial loans.
However, the report outlined government’s intention to prioritize concessional loans to alleviate pressure on domestic revenues, which have witnessed a decline over the past two years.
Data from the Ministry of Finance reveals that as of June 2023, the proportion of external debt owed to commercial creditors rose to 13.6 percent from 10.4 percent, indicating heightened reliance on commercial borrowing for deficit financing.
Domestically, commercial banks held the largest share of domestic public debt, accounting for 38.6 percent as of June 2023.
