Govt to borrow Shs13 trillion to fund next financial year’s budget

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The Minister of State for Finance (General Duties), Mr. Henry Musasizi, tabled the 2024–25 National Budget Framework Paper, highlighting the government’s intention to borrow over Shs13 trillion to fund the Shs52.722 trillion budget.

“The total resource envelope of Shs52.722 trillion is comprised of domestic revenues equivalent to Shs 29.957 trillion, budget support amounting to Shs 28.94 billion, domestic borrowing amounting to Shs 4.116.02 billion, external project support worth Shs 8.876.87 billion, domestic refinancing (rollover) of Shs 9.455 trillion, and local revenue for local governments (AIA) of Shs 287.10 billion,” the document reads in part.

However, the Minister revealed that the projected budget for 2024/25 would amount to Shs52.722 trillion, compared to the Shs52.736 trillion approved budget for the financial year 2023/24, thus indicating a decline of Shs14.10 billion.

For external debt repayments, the government has earmarked Shs3.223 trillion compared to Shs2.638 trillion that was set aside in the financial year 2023/24, with the Ministry of Finance highlighting that over the medium term, external debt payments are projected to increase due to the increase in commercial loans over the last few years. Going forward, the government’s financing strategy is to reduce borrowing on commercial terms and focus more on concessional borrowing.

Additionally, interest payments are projected to amount to Shs7.623 trillion, and of this, Shs5.662 trillion is projected for domestic interest payments while Shs1.960 trillion will be foreign interest payments and commitment fees.

In conclusion, the government also indicated that the stock of public debt increased from US$ 20.99 billion (Shs 78.833 trillion) in June 2022 to US$ 23.66 billion (Shs 86.779 trillion) in June 2023.

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