{"id":40769,"date":"2022-11-25T15:06:47","date_gmt":"2022-11-25T15:06:47","guid":{"rendered":"https:\/\/www.africa-press.net\/uganda\/all-news\/expensive-loans-reducing-reserves-weakening-ugandas-growth-outlook-says-moodys"},"modified":"2022-11-25T15:21:19","modified_gmt":"2022-11-25T15:21:19","slug":"expensive-loans-reducing-reserves-weakening-ugandas-growth-outlook-says-moodys","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/uganda\/all-news\/expensive-loans-reducing-reserves-weakening-ugandas-growth-outlook-says-moodys","title":{"rendered":"Expensive loans, reducing reserves weakening Uganda’s growth outlook, says Moody\u2019s"},"content":{"rendered":"

Africa-Press – Uganda. <\/strong><\/span>A combination of expensive loans, rising debt repayment and decline in foreign reserves, among other risks have influenced Moody\u2019s to downgrade Uganda\u2019s outlook from stable to negative.<\/p>\n

The negative outlook, Moody\u2019s said, was due to increasing external debt-service repayments, tightening of global financial conditions and erosion of the foreign exchange reserves, noting that the debt trajectory was vulnerable while currency depreciation continues to put pressure on the economy.<\/p>\n

\u201cThe structure of Uganda\u2019s debt is becoming less favourable. Shorter-term and more expensive domestic borrowing has been key in financing the fiscal deficit in recent years. Domestic debt accounted for 38 percent of public debt as of December 2021, but 83 percent of interest payments,\u201d Moody\u2019s said.<\/p>\n

Bank of Uganda recently indicated that as of June, the stock of public debt had increased to Shs78.8 trillion, a growth of 2.3 percent largely driven by expansion in domestic debt to finance underperformance of tax revenue and growing expenditure pressures.<\/p>\n

Therefore, Moody\u2019s said, Uganda\u2019s debt burden has increased, reaching 48.6 percent as of June, from an estimated 35.1 percent of gross domestic product in June 2019.<\/p>\n

Moody\u2019s also noted that the weighted average interest rate for Uganda\u2019s total debt has risen to 6.1 percent from 5.6 percent in June 2019 with interest rate on external debt remaining at 1.6 percent, which means that much of the external debt remains predominantly concessional from bilateral and multilateral lenders.<\/p>\n

Moody\u2019s also said about 21.7 percent of Uganda\u2019s external debt stock was contracted at variable rates, increasing exposure to interest rate risk while debt affordability continues to deteriorate due to high interest repayments, which now accounts for 21.6 percent of government revenue, up from 14.2 percent in 2019 and is further projected to rise to about 23 percent by 2023.<\/p>\n

Government, with support from the International Monetary Fund, has been seeking to strengthen revenue mobilisation through removal of tax exemptions and improving administration, as well as sustained access to concessional financing.<\/p>\n

However, the continued erosion of debt affordability threatens Uganda\u2019s fiscal space at a time when the globe economy has slackened.<\/p>\n

External vulnerability risks continue to increase driven by tightening of global liquidity conditions, higher external debt servicing requirements and a weakening foreign exchange reserve position.<\/p>\n

Moody\u2019s said portfolio outflows and increased exchange rate volatility have led to a drawdown in foreign exchange reserves over the course of 2022 with reserves declining to $3.7b as of from a peak of $4.5b in March.<\/p>\n

The erosion in reserves, Moody\u2019s said, is expected to continue beyond 2023, driving the import cover below the recommended four months by Bank of Uganda.<\/p>\n

Moody\u2019s also said more challenges coming from external debt servicing profile over the next few years, are expected to heighten as principal repayments rise – driven by payments to the Export-Import Bank of China and non-concessional creditors – and repayments to the IMF begin from 2025 onward.<\/p>\n

Moody\u2019s also affirmed Uganda\u2019s B2 rating, which reflects the country\u2019s credit constraints, sustained erosion in fiscal strength, and elevated susceptibility to event risk, including political risk.<\/p>\n

For More News And Analysis About Uganda<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Uganda. A combination of expensive loans, rising debt repayment and decline in foreign reserves, among other risks have influenced Moody\u2019s to downgrade Uganda\u2019s outlook from stable to negative. The negative outlook, Moody\u2019s said, was due to increasing external debt-service repayments, tightening of global financial conditions and erosion of the foreign exchange reserves, noting […]<\/p>\n","protected":false},"author":84,"featured_media":40768,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[233,240,234],"class_list":["post-40769","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-uganda","tag-uganda"],"yoast_head":"\nExpensive loans, reducing reserves weakening Uganda's growth outlook, says Moody\u2019s - Uganda<\/title>\n<meta name=\"description\" content=\"A combination of expensive loans, rising debt repayment and decline in foreign reserves, among other risks have influenc ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/uganda\/all-news\/expensive-loans-reducing-reserves-weakening-ugandas-growth-outlook-says-moodys\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Expensive loans, reducing reserves weakening Uganda's growth outlook, says Moody\u2019s\" \/>\n<meta property=\"og:description\" content=\"A combination of expensive loans, rising debt repayment and decline in foreign reserves, among other risks have influenc ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/uganda\/all-news\/expensive-loans-reducing-reserves-weakening-ugandas-growth-outlook-says-moodys\" \/>\n<meta property=\"og:site_name\" content=\"Uganda\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2022-11-25T15:06:47+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-11-25T15:21:19+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2022\/11\/postQueueImg_1669376216.67.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"720\" \/>\n\t<meta property=\"og:image:height\" content=\"480\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/expensive-loans-reducing-reserves-weakening-ugandas-growth-outlook-says-moodys#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/expensive-loans-reducing-reserves-weakening-ugandas-growth-outlook-says-moodys\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Expensive loans, reducing reserves weakening Uganda’s growth outlook, says Moody\u2019s\",\"datePublished\":\"2022-11-25T15:06:47+00:00\",\"dateModified\":\"2022-11-25T15:21:19+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/expensive-loans-reducing-reserves-weakening-ugandas-growth-outlook-says-moodys\"},\"wordCount\":525,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/expensive-loans-reducing-reserves-weakening-ugandas-growth-outlook-says-moodys#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2022\/11\/postQueueImg_1669376216.67.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Uganda\",\"uganda\"],\"articleSection\":[\"all news\",\"economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/uganda\/all-news\/expensive-loans-reducing-reserves-weakening-ugandas-growth-outlook-says-moodys#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/expensive-loans-reducing-reserves-weakening-ugandas-growth-outlook-says-moodys\",\"url\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/expensive-loans-reducing-reserves-weakening-ugandas-growth-outlook-says-moodys\",\"name\":\"Expensive loans, reducing reserves weakening Uganda's growth outlook, says Moody\u2019s - 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