A street food vendor sells barbecue chicken to customers, after Uganda’s president Yoweri Museveni reopened the economy which permitted bars and musicians to perform amid the coronavirus disease (COVID-19) containment efforts, in Nakulabye suburb of Kampala, Uganda January 31, 2022. REUTERS/Abubaker Lubowa

KAMPALA, Sept 14 (Reuters) – Uganda’s economy is likely to grow by 6.5% in the 2024/25 financial year, its finance minister said on Thursday, accelerating slightly from expected growth in the current year and driven by the industrial, services and agriculture sectors.

The government forecasts the economy will grow 6% in the 2023/24 financial year which ends in June 2024.

Finance Minister Matia Kasaija said public debt as a percentage of gross domestic product (GDP) had declined to 47% at the end of June from 48.4% a year earlier.

There had been “a slower rate of debt accumulation, in line with government’s commitments to fiscal consolidation,” Kasaija told an event at which he presented the government’s budget strategy.

In absolute terms total public debt as at end of June stood at 86.8 trillion Ugandan shillings ($23.33 billion), compared with 78.8 trillion shillings in June 2022, but economic growth meant its share of GDP shrank.

The World Bank last month halted all new lending to Uganda to protest the passing of a tough new anti-gay law.

This month, ratings agency Fitch affirmed Uganda’s rating at B+ with a negative outlook, citing problems with accessing cheap credit after the World Bank move.

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Overall the size of Uganda’s economy is projected to hit US$ $63.36 billion in 2024/25, according to the finance ministry.

Kasaija said funding priorities in the next financial year would include expediting the construction of a crude oil refinery, with government meeting majority funding for the project rather than sourcing it from private investors.

A previous deal with an international consortium that includes a unit of U.S. firm Baker Hughes BKR.O to fund the refinery collapsed in July.

Uganda and international oil firms like France’s TotalEnergies TTEF.PA, and China’s CNOOC 0883.HK are also implementing multi-billion dollar projects including a crude oil pipeline. Commercial oil production is projected to take off in 2025.

($1 = 3,720.0000 Ugandan shillings)

(Reporting by Elias Biryabarema; Editing by George Obulutsa and Susan Fenton)

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