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KIU Business Desk: Gov’t Borrowing for COVID-19 Relief Funds Increases Public Debt by 20.5%

KIU, Western Campus – Uganda’s stock of public debt has increased by 20.5% to over 56.5 trillion shillings – which is around 40% of the country’s Gross Domestic Product (GDP) – as a result of borrowing with an aim of countering the economic distress caused by the COVID-19 pandemic, according to the Bank of Uganda (BoU) Monetary Policy Report for August 2020.

The report says that the stock of public debt increased between June 2019 and June 2020 because the government borrowed 6.3623 trillion shillings from the International Monetary Fund (IMF), PTA Bank, International Development Association (IDA) and Stanbic Bank.

“The provisional total public debt stock (at nominal value) as at end June 2020 stood at UGX. 56,526.2 billion (40.0 percent of GDP), which is an increase of 20.5 percent relative to June 2019,” the report reads in part.

“The increase in the stock of total public debt between June 2019 and June 2020 was mainly due to a UGX 6,362.3 billion borrowing from the IMF, PTA Bank, IDA and Stanbic Bank towards countering the economic distress brought about by the pandemic,” it adds.

The borrowed funds will be key in jumpstarting the economy, with the Central Bank announcing in the same report that Uganda was experiencing increased economic activity after the easing of the lockdown measures to check the spread of COVID-19.