{"id":73947,"date":"2024-05-23T06:10:37","date_gmt":"2024-05-23T06:10:37","guid":{"rendered":"https:\/\/www.africa-press.net\/uganda\/?p=73947"},"modified":"2024-05-23T05:42:00","modified_gmt":"2024-05-23T05:42:00","slug":"what-ugandas-credit-downgrade-means","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means","title":{"rendered":"What Uganda\u2019s credit downgrade means"},"content":{"rendered":"

Africa-Press – Uganda. <\/strong><\/span>Global rating agency Moody\u2019s on Friday downgraded Uganda\u2019s rating to B3 from B2, citing diminished debt affordability and increasingly constrained financing options, which forced the commercial banks to buy hard currency, hence weakening the Uganda shilling.<\/b><\/p>\n

By Monday evening, commercial banks quoted the shilling at 3,782\/3,792, compared to Friday\u2019s close of 3,775\/3,785.<\/p>\n

In a statement issued by the global rating agency, the downgrade is mainly due to concerns on Uganda\u2019s debt affordability and largely due to concerns over Uganda\u2019s debt affordability and limited financing options.<\/p>\n

As a result of the ratings, the Uganda government may face problems accessing global credit markets or attracting investors into the country as Moody\u2019s indicated that the problem was Uganda\u2019s continued reliance on costly domestic and non-concessional external financing, which has affected debt affordability with interest payments rising from 14.2 per cent in 2019 to 22.2 per cent in 2023.<\/p>\n

Moody\u2019s report predicts ratio of interest and payment and government revenue to remain high.<\/p>\n

According to Moody\u2019s increased domestic borrowing and other methods to cover deficiencies in revenues point to reduced access to credit.<\/p>\n

Uganda\u2019s debt has been rising in the last five years from sh42.20 trillion in 2019 to sh93.38 as of December 2023. The Ministry of Finance plans to reduce external borrowing and increase domestic borrowing at the ratio of 40:60 in the 2024\/25 financial year.<\/p>\n

However, the global rating agency said it changed the outlook for Uganda to stable from negative.<\/p>\n

\u201cThe downgrade of the ratings reflects diminished debt affordability and increasingly constrained financing options, amid greater reliance than in the past on comparatively costly domestic and non-concessional sources of external financing,\u201d Moody\u2019s said.<\/p>\n

Adding: \u201cExternal vulnerability risk also remains elevated, a reflection of a more challenging external debt servicing profile, the persistence of tighter global financial conditions, and diminished foreign exchange reserve adequacy.\u201d<\/p>\n

The stable outlook reflects Moody’s assessment that at the B3 rating level, Uganda’s credit challenges and strengths are incorporated. Downside risks relate to the debt affordability and external vulnerability challenges mentioned above.<\/p>\n

On another positive development, Moody’s explained that gradual improvements in revenue mobilization capacity would, if further sustained, support fiscal consolidation efforts and could eventually provide relief to the debt affordability challenges faced by the government, but face execution risks.<\/p>\n

The Uganda government has stepped up its effort to increase domestic revenue by trying to expand its revenue base and improving the tax administration.<\/p>\n

Moody\u2019s said under its medium-term revenue strategy, the government remains committed to increasing the ratio of domestic revenue collection to GDP by 0.5 pp annually, including through the rationalization of exemptions and improved tax administration. Moody’s baseline integrates further improvements in the government revenue ratio to around 15.6 percent of GDP by fiscal 2025, although higher interest expenditures will offset the impact on debt affordability.<\/p>\n

\u201cThese improvements are subject to execution risks related to weaknesses in public financial management, underscored by the underperformance of budgetary targets in the current fiscal year to date,\u201d said Moody\u2019s.<\/p>\n

Moody’s expects that Uganda’s track record of macroeconomic stability will be maintained. Uganda’s growth performance has been above that of B-rated peers over the past decade, with real GDP growth of 4.7 percent on average, compared with a median of 3.8 per cent for B-rated countries.<\/p>\n

In a related development, Moody’s expects growth to accelerate to a rate of 6-7 percent over the medium-term horizon, on the back of the developments in the oil sector, ongoing investments in transport and energy generation infrastructure to address structural constraints, and favorable demographic trends. These dynamics are balanced by the economy’s small size, vulnerability to climate-related shocks, and low wealth levels, limiting shock-absorption capacity).<\/p>\n

In this regard, it stated that the sector could strengthen growth, fiscal revenue, and the external position, which would bolster Uganda’s creditworthiness, and provide prudent management of oil wealth. Despite progress, the completion of oil infrastructure projects remains vulnerable to implementation risks, as past delays indicate.<\/p>\n

However, it said further delays in the start of oil production would lead to wider external deficits over the longer term if debt \u2014 contracted mainly to finance oil-related projects \u2014 were not compensated by higher foreign exchange receipts and revenue generation capacity.<\/p>\n

In the aspects of Environmental, Social, and Governance considerations, Moody\u2019s said Uganda’s ESG Credit Impact Score (CIS-4) reflects high exposure to environmental risk, very high social risk, and very low resilience, reflecting a weak governance profile, low wealth level, and weakening fiscal metrics that exacerbate the exposure to E and S.<\/p>\n

Looking into the future, Moody\u2019s said upward pressure on the rating would arise from sustained progress in strengthening revenue generation capacity and access to funding at moderate costs, reversing the deterioration in debt affordability.<\/p>\n

\u201cA significant and durable strengthening of Uganda’s external position that restored and preserved external buffers would also support a higher rating. Over the longer term, oil production being ramped up would also support creditworthiness by promoting growth and fiscal revenues, provided the oil wealth is managed prudently,\u201d said Moody\u2019s<\/p>\n

Source: Monitor<\/b><\/p>\n

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

Africa-Press – Uganda. Global rating agency Moody\u2019s on Friday downgraded Uganda\u2019s rating to B3 from B2, citing diminished debt affordability and increasingly constrained financing options, which forced the commercial banks to buy hard currency, hence weakening the Uganda shilling. By Monday evening, commercial banks quoted the shilling at 3,782\/3,792, compared to Friday\u2019s close of 3,775\/3,785. […]<\/p>\n","protected":false},"author":84,"featured_media":73946,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,6],"tags":[233,240,234],"class_list":["post-73947","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-files","tag-africa-press","tag-africa-press-uganda","tag-uganda"],"yoast_head":"\nWhat Uganda\u2019s credit downgrade means - Uganda<\/title>\n<meta name=\"description\" content=\"Global rating agency Moody\u2019s on Friday downgraded Uganda\u2019s rating to B3 from B2, citing diminished debt affordability ...\" \/>\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\/what-ugandas-credit-downgrade-means\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Uganda\u2019s credit downgrade means\" \/>\n<meta property=\"og:description\" content=\"Global rating agency Moody\u2019s on Friday downgraded Uganda\u2019s rating to B3 from B2, citing diminished debt affordability ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means\" \/>\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=\"2024-05-23T06:10:37+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2024\/05\/sm_1716430079.31784.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"720\" \/>\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=\"4 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\/what-ugandas-credit-downgrade-means#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"What Uganda\u2019s credit downgrade means\",\"datePublished\":\"2024-05-23T06:10:37+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means\"},\"wordCount\":857,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2024\/05\/sm_1716430079.31784.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Uganda\",\"uganda\"],\"articleSection\":[\"all news\",\"files\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means\",\"url\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means\",\"name\":\"What Uganda\u2019s credit downgrade means - Uganda\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2024\/05\/sm_1716430079.31784.jpg\",\"datePublished\":\"2024-05-23T06:10:37+00:00\",\"author\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"description\":\"Global rating agency Moody\u2019s on Friday downgraded Uganda\u2019s rating to B3 from B2, citing diminished debt affordability ...\",\"breadcrumb\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#primaryimage\",\"url\":\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2024\/05\/sm_1716430079.31784.jpg\",\"contentUrl\":\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2024\/05\/sm_1716430079.31784.jpg\",\"width\":1280,\"height\":720,\"caption\":\"What Uganda\u2019s credit downgrade means\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.africa-press.net\/uganda\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"What Uganda\u2019s credit downgrade means\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/#website\",\"url\":\"https:\/\/www.africa-press.net\/uganda\/\",\"name\":\"Uganda\",\"description\":\"Just another Africa News Agency Sites site\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.africa-press.net\/uganda\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\",\"name\":\"cfeditoren\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/7417380fa9e23b5c57fdbfdaf3fdf92ee478f759a084addda5faa3732853e74a?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/7417380fa9e23b5c57fdbfdaf3fdf92ee478f759a084addda5faa3732853e74a?s=96&d=mm&r=g\",\"caption\":\"cfeditoren\"}}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"What Uganda\u2019s credit downgrade means - Uganda","description":"Global rating agency Moody\u2019s on Friday downgraded Uganda\u2019s rating to B3 from B2, citing diminished debt affordability ...","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means","og_locale":"en_US","og_type":"article","og_title":"What Uganda\u2019s credit downgrade means","og_description":"Global rating agency Moody\u2019s on Friday downgraded Uganda\u2019s rating to B3 from B2, citing diminished debt affordability ...","og_url":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means","og_site_name":"Uganda","article_publisher":"https:\/\/www.facebook.com\/AfricaPressTunisiaa","article_published_time":"2024-05-23T06:10:37+00:00","og_image":[{"width":1280,"height":720,"url":"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2024\/05\/sm_1716430079.31784.jpg","type":"image\/jpeg"}],"author":"cfeditoren","twitter_card":"summary_large_image","twitter_misc":{"Written by":"cfeditoren","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#article","isPartOf":{"@id":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means"},"author":{"name":"cfeditoren","@id":"https:\/\/www.africa-press.net\/uganda\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb"},"headline":"What Uganda\u2019s credit downgrade means","datePublished":"2024-05-23T06:10:37+00:00","mainEntityOfPage":{"@id":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means"},"wordCount":857,"commentCount":0,"image":{"@id":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#primaryimage"},"thumbnailUrl":"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2024\/05\/sm_1716430079.31784.jpg","keywords":["Africa Press","Africa Press-Uganda","uganda"],"articleSection":["all news","files"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means","url":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means","name":"What Uganda\u2019s credit downgrade means - Uganda","isPartOf":{"@id":"https:\/\/www.africa-press.net\/uganda\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#primaryimage"},"image":{"@id":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#primaryimage"},"thumbnailUrl":"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2024\/05\/sm_1716430079.31784.jpg","datePublished":"2024-05-23T06:10:37+00:00","author":{"@id":"https:\/\/www.africa-press.net\/uganda\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb"},"description":"Global rating agency Moody\u2019s on Friday downgraded Uganda\u2019s rating to B3 from B2, citing diminished debt affordability ...","breadcrumb":{"@id":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#primaryimage","url":"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2024\/05\/sm_1716430079.31784.jpg","contentUrl":"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2024\/05\/sm_1716430079.31784.jpg","width":1280,"height":720,"caption":"What Uganda\u2019s credit downgrade means"},{"@type":"BreadcrumbList","@id":"https:\/\/www.africa-press.net\/uganda\/all-news\/what-ugandas-credit-downgrade-means#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.africa-press.net\/uganda\/"},{"@type":"ListItem","position":2,"name":"What Uganda\u2019s credit downgrade means"}]},{"@type":"WebSite","@id":"https:\/\/www.africa-press.net\/uganda\/#website","url":"https:\/\/www.africa-press.net\/uganda\/","name":"Uganda","description":"Just another Africa News Agency Sites site","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.africa-press.net\/uganda\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.africa-press.net\/uganda\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb","name":"cfeditoren","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.africa-press.net\/uganda\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/7417380fa9e23b5c57fdbfdaf3fdf92ee478f759a084addda5faa3732853e74a?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/7417380fa9e23b5c57fdbfdaf3fdf92ee478f759a084addda5faa3732853e74a?s=96&d=mm&r=g","caption":"cfeditoren"}}]}},"_links":{"self":[{"href":"https:\/\/www.africa-press.net\/uganda\/wp-json\/wp\/v2\/posts\/73947","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.africa-press.net\/uganda\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.africa-press.net\/uganda\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.africa-press.net\/uganda\/wp-json\/wp\/v2\/users\/84"}],"replies":[{"embeddable":true,"href":"https:\/\/www.africa-press.net\/uganda\/wp-json\/wp\/v2\/comments?post=73947"}],"version-history":[{"count":0,"href":"https:\/\/www.africa-press.net\/uganda\/wp-json\/wp\/v2\/posts\/73947\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.africa-press.net\/uganda\/wp-json\/wp\/v2\/media\/73946"}],"wp:attachment":[{"href":"https:\/\/www.africa-press.net\/uganda\/wp-json\/wp\/v2\/media?parent=73947"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.africa-press.net\/uganda\/wp-json\/wp\/v2\/categories?post=73947"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.africa-press.net\/uganda\/wp-json\/wp\/v2\/tags?post=73947"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}