Based on the joint Low-Income Country Debt Sustainability Framework of the World Bank and the IMF, Uganda continues to be assessed as a low risk of debt distress. The authorities intend to continue to rely on concessional assistance to finance their public infrastructure investment in the coming years, but increase gradually their use of non-concessional funds as they build up their debt management capacity. Under these baseline assumptions, external debt is expected to remain well below the thresholds over the medium and long term, and public debt exhibits stable debt dynamics. The sensitivity of Uganda’s debt indicators to a growth shock suggests that careful selection of public investment projects have a key role to play in the maintenance of debt sustainability over the near and medium term, requiring continued attention from the Ugandan authorities to improving investment planning processes and strengthening implementation capacity.
Prepared by the IMF and World Bank staff in consultation with the authorities. This DSA replaces the one prepared in 2008 as a staff supplement in
The World Bank’s Country Policy and Institutional Assessment (CPIA) ranks Uganda as a “strong performer.” Debt burden thresholds for strong performers are NPV of debt to GDP ratio of 50 percent, NPV of debt-to-exports ratio of 200 percent, NPV of debt-to-revenue ratio of 300 percent, debt-service-to-exports ratio of 25 percent, and debt-service-to-revenue ratio of 35 percent.
The Bujagali hydroelectric plant was financed through a US $800 million private consortium with participation from multilateral lenders, with a public sector guarantee of only US $115 million.
See Uganda’s National Development Plan 2010/11-2014/15, and the Joint Staff Advisory Note on Uganda’s National Development Plan 2010/11-2014/15 (http://www.imf.org).
Historical averages exclude FY1999/2000, where growth was abnormally high.
Export grew at abnormally high levels of 57 percent and 19 percent during 2007/08 and 2008/09 as recording was adjusted to include the informal border trade that is usually not captured in the Customs data previously used to derive export figures.
Non-concessional borrowing is assumed to be contracted on IBRD-like terms, with LIBOR rates, 10 years of grace and 20 years of repayment.