An Analysis of Uganda’s Fiscal Deficit and Domestic Debt Accumulation
This paper reviews the trend of fiscal deficit and how it is financed. It also explores the composition of public debt and the likely impact on the economy at large. The paper finds that while the debt levels don’t raise immediate sustainability concerns, the composition of public debt and the recent pace of debt accumulation raise sustainability concern. The use of domestic debt has increased the debt service burden, risks crowding out the private sector and also presents the debt (re)financing risk as the average maturity of domestic debt is just 2.3 years. The increasing use of non- concessional loans also presents challenges including the way the loans are acquired and the associated delayed absorption. The existing legal framework presents a platform for institutional management, and there is need to leverage on that— building sufficient capacity for economic assessment of the loans. There is need to enforce measures to enhance domestic revenue, identify efficiency measures in the budget and explore alternative means of financing from private sector.