Uganda’s explicit contingent liabilities continued to rise this year. By December 2023, the number of loan guarantees had increased from 9 to 12, bringing the total guaranteed loan portfolio to USD 120 million. This increase was primarily driven by disbursements from international financial entities such as the Islamic Development Bank, International Islamic Trade Finance Corporation, OPEC Fund, and the Arab Bank for Economic Development in Africa, according to the latest Contingent Liabilities Annual Report for FY 2022-2023.
The Uganda Development Bank Limited and the Islamic University in Uganda are the major holders of these guarantees. Despite an 8.1% increase in the government’s exposure to this debt, reaching USD 56.22 million, the debt-to-GDP ratio remains stable and compliant with the Guidelines for the Management of Contingent Liabilities. As of December 2023, under the Public-Private Partnership (PPP) Act of 2015, there were 35 active PPP projects. None of these projects have yet achieved financial closure, and thus no assessments have been conducted to determine the contingent liabilities that may arise from the agreements linked to these projects.
The Directorate of Debt and Cash Policy (DDCP) within the Ministry of Finance, Planning, and Economic Development (MoFPED) compiles a comprehensive annual report on Uganda’s contingent liabilities. The latest report for the fiscal year 2022/23 details the Government of Uganda’s various contingent liabilities, including loan guarantees, debts of state entities, liabilities from public-private partnerships, and legal actions against the government.
Borrowing by public enterprises continues to rise, posing an implicit contingent liability for the government. As of the end of June 2023, the total debt of public entities, including state-owned enterprises (SOEs) and extra-budgetary units (EBUs), stood at UGX 2,151.6 billion.
Liabilities from subsidies, grants, and contributions by the Uganda government to public entities rose by 16.9 percent to UGX 1,467 billion, despite a significant drop in their average reliance on these funds. Loan approvals totaled UGX 38.2 billion, with eight entities repaying in full and 13 complying with their loan obligations.
Finally, Uganda’s local government debt decreased from UGX 54.9 million in June 2022 to UGX 16.9 million in June 2023, primarily due to a reduction in liabilities from a court case against Mbale City. Total liabilities dropped by 14% to UGX 48,878 million, indicating a lower fiscal risk compared to guarantees, state-owned enterprises, and extra-budgetary units.
By June 2023, Uganda’s government faced a 14.3% increase in explicit contingent liabilities from legal proceedings, reaching UGX 4.41 trillion, mainly due to large domestic claims within Ministries, Departments, and Agencies (MDAs).