Uganda to cut spending, domestic borrowing in 2025-2026 fiscal year
Uganda's economy is expected to contract after the Government announced budget cuts that could see domestic spending trimmed as borrowing soars to 1.09 billion to plug the budget deficit for the 2025-2026 fiscal year. CNBC Africa is joined by Chad Nyakatura, Money Market Sales Manager at Stanbic Bank Uganda.
Wed, 16 Oct 2024 15:16:11 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The government's decision to reduce domestic spending and increase borrowing is part of a fiscal consolidation strategy, but the need for funding for infrastructure projects and the oil and gas sector complicates this plan.
- Uganda's reliance on external financing further complicates the situation, as access to these funds could help ease pressure on interest rates and boost private sector credit.
- Despite concerns over funding and credit ratings, positive developments such as the construction of the Standard Gauge Railway project could support regional trade and economic growth in Uganda.
Uganda's economy is on the cusp of contraction as the government grapples with budget cuts and a surge in domestic borrowing. The announcement of these measures to plug the budget deficit for the 2025-2026 fiscal year has sent ripples through the country's financial markets and raised concerns about the impact on economic growth and stability. Chad Nyakatura, the Money Market Sales Manager at Stanbic Bank Uganda, weighed in on the implications of these developments for the economy and the financial sector. The decision by the government to trim domestic spending and reduce borrowing is part of a broader strategy aimed at fiscal consolidation. However, the need for substantial funding to support infrastructure projects and the emerging oil and gas sector complicates this plan. The country's reliance on external financing adds another layer of complexity to the situation, as access to these funds could alleviate pressure on interest rates and stimulate private sector credit. Nyakatura emphasized that the current state of development and infrastructure projects in Uganda makes it unlikely for the government to significantly cut back on spending at this juncture.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.
