Published on 09/07/2024
At Budget Training Event in Kampala, Treasury Secretary Ramathan Ggoobi urged the media to scrutinize personal debt as intensely as public debt. He noted that many Ugandans borrow heavily for non-essential expenses like weddings, questioning if brides are collateral for such loans.
Ggoobi emphasized that personal debt’s impact on individuals is often overlooked, despite its severity. He made his appeal during a press briefing at Hotel Africana.
“I see there is a lot of interest in the debate about public debt in Uganda. However, many individuals who fear public debt are personally indebted to the marrow. I urge the media to also focus on personal and corporate debt. Let Ugandans be as concerned about these debts as they are about public debt, because public debt is already under heavy scrutiny,” said Ggoobi.
The Secretary to the Treasury’s remarks come in the wake of the Report on Public Debt, Grants, Guarantees, and Other Financial Liabilities for the Financial Year 2023/2024, which indicated that as of December 2023, Uganda’s public debt stood at US$24.60 billion (Shs.93.38 trillion).
Ggoobi urged Ugandans to avoid borrowing for weddings, pointing out that such loans lead to unnecessary stress and financial burdens. “Borrowing for weddings is unnecessary. What is the collateral? Is it the bride? After the wedding, how do you plan to pay back? The wedding does not generate income to repay the loan. Please, Ugandans, do not do this,” he remarked.
He advised Ugandans to learn from the government’s approach to borrowing, highlighting the high-interest rates in credit markets. The government suspended borrowing worth US$414 million (UGX 1.52 trillion) due to the high-interest rates, a decision Ggoobi believes prevented future financial strain.
“This year alone, we planned to borrow US$414 million to support the budget. However, when we checked, the interest rates were very high, at 9% on a Euro. States do not borrow at such high rates. We requested the President to suspend this borrowing, and he agreed. As you can see, we are ending the financial year without this borrowing, and the sky hasn’t fallen,” explained Ggoobi.
His remarks on private debt come at a time when the Ministry of Finance’s June 2024 report revealed that commercial banks had advanced loans totalling UGX 20.563 trillion by March 2024, compared to UGX 19.255 trillion in the previous year, indicating an increase of UGX 1.308 trillion. Despite this, commercial banks are struggling to recover some of the loans, with non-performing loans decreasing slightly from UGX 1.139 trillion in March 2023 to UGX 1.071 trillion in March 2024.
Ggoobi reiterated that prudent borrowing practices are essential to avoid future financial crises. “We have managed to operate within our means without additional borrowing. Certain bills may not be paid, and some services may be delayed, but this approach prevents us from facing severe financial repercussions in the future,” he noted.
