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Uganda External Debt
Although Uganda was not one of the largest debtor
nations in
Africa, by the late 1980s the country had accumulated a
significant external debt. By 1980, following eight years
of
economic decline under President Amin, external
liabilities rose
to over US$700 million. The Obote government's recovery
program
produced a further debt increase to US$1.043 billion by
1984. By
1987 Uganda's outstanding external debt stood at US$1.405
billion, representing over half of GDP and nearly three
and a
half times the level of exports. At the end of 1989 total
external debt was US$1.8 billion; by late 1990, it was
approaching US$2 billion. At the same time, the cost of
servicing
the foreign debt rose sharply from US$45 million in 1986
to US$70
million in 1987 and an estimated US$139 million in 1988.
With
Uganda's foreign earnings sharply down in 1987 and
declining
further in 1988, the debt service ratio also rose from 11
percent
in 1986 to 18.9 percent in 1987 and an estimated 56
percent in
1988. If all debt maturities were to be cleared, payments
would
still absorb almost 60 percent of export earnings. Arrears
due in
1989 were estimated at about US$70 million.
In 1988 more than 95 percent of Uganda's debt was
official or
officially guaranteed, reflecting the country's weak
capacity to
borrow from private banks. Nearly 83 percent of the debt
was
concessional, leading to some improvement in the average
grace
and maturity periods of the debts. Nevertheless,
multilateral
debts claimed a significant share of the total, and these
debts
could not be rescheduled. In FY 1987-88, US$170 million in
medium-term and long-term debt reached maturity,
comprising
US$126.4 million in principal and US$43.6 million in
interest. Of
this total, US$135.7 million, or about 80 percent, was
owed to
multilateral creditors, the remainder to bilateral
creditors.
The Museveni government tried to counteract these
problems
with a revised loan program. In particular, the government
wanted
to obtain grants or project-related loans in agriculture,
industry, tourism, and energy to promote local
productivity. In
addition, terms of the new loans averaged twenty-year
maturity
periods, with five-year grace periods. Museveni was
successful in
rescheduling and refinancing some old debt. In June 1987,
the
Paris Club (see Glossary) rescheduled US$113 million in
loans to Uganda, and further Paris Club rescheduling took place in
mid-1989.
In September 1988, the IMF approved the second-year
structural adjustment program of US$39 million, after the
Ugandan
government cleared roughly US$18 million in arrears to the
agency. Britain, France, the United States, Italy, and
Israel
expressed satisfaction with Uganda's progress under the
IMF
program and rescheduled approximately US$25 to 30 million
worth
of debt.
Data as of December 1990
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