The government has released the Medium Term Debt Management Strategy (MTDS) for financial years 2023/2024 and 2026/2027.
The strategy was released last Thursday.
In the strategy, the Ministry of Finance, Planning and Economic Development says in the medium-term during FY2023/2024, the government intends to further reduce domestic borrowing from 2.1 percent in FY2022/2023 to 0.9 percent of Gross Domestic Product (GDP) in FY2023/2024 and increase external borrowing for priority projects.
The ministry said government borrowing from the domestic market for fiscal purposes in FY2023/2024 is projected at Shs1.585 trillion compared to Shs5 trillion in FY2022/2023, which is equivalent to one percent of GDP.
“This is in line with the government’s policy decision to maintain domestic borrowing to no more than one percent of GDP in order to avoid crowding out of the private sector,” the ministry said in the strategy.
Servicing public debt continues to put more pressure on the budget, whereby total interest payments as a percentage of GDP increased from 2.3 percent in the FY2018/2019 to 2.8 percent in the FY2020/2021. It reached 3.1 percent in FY2021/2022, which has an adverse effect on the resources available for the development programmes.
