“This paper analyses Uganda’s external debt problem. Like many other countries in the
sub-Saharan Africa, Uganda is a severely indebted low-income country. Uganda’s total
debt stock at end June 1993 was estimated at US$2.64 billion, with a debt service ratio of
nearly 80%. A look at Uganda’s debt profile since the 1970s reveals a composition of
debt mainly from multilateral creditors. The study particularly links debt to economic
growth. A major observation is the acute debt servicing obligation of the country, and
the fact that a large proportion of Uganda’s debt is not eligible for rescheduling. Debt
payments have been a fundamental cause of low economic growth. Of great concern is
whether the economy can sustain its current growth rate of 5% per annum and at the same time maintain adequate domestic investment, given the heavy reliance on foreign import capital flows. Debt relief is not enough; continued government commitment to structural reforms and sound debt management are essential.”
