Foreign debt increases by 50 percent

A 50-percent increase in Uganda’s external debt over the past 10 years has significantly hampered poverty-reduction programmes and held back expenditure on essential services, civil society sources said on Monday. "The debt is hampering our rate of development and expenditure on essential services for poverty-reducing sectors, such as primary education, primary health care, water and sanitation, agricultural extension and rural roads," a statement released by the Uganda Debt Network (UDN), an advocacy association of about 100 civil-society groups, said. "We appreciate that government has committed itself to reduce the country’s debt burden and to limit future borrowing to [US] $200 million per annum," it added. "We, however, believe that government will not be able to fulfill this commitment." The UDN said the debt had accumulated mainly because of the Ugandan government’s inability to supervise and monitor the performance of its loans, most of which were consumption - rather than production - oriented. Government officials confirmed the debt had risen significantly. "Our foreign debt currently stands at $4.5 billion, up from $2.9 ten years ago, mainly due to the accumulation of new and old debts, and interest on loans in spite of the fact that we were the first country to benefit from HIPC [a World Bank and International Monetary Fund debt-relief initiative]," finance ministry spokeswoman, Robinah Lubimbwa, told IRIN. Some of Uganda's creditor countries, she added, did not subscribe to HIPC and insisted that the East African country pay up. They had also threatened court action. "Countries like Libya and Iraq do not subscribe to HIPC and want us to pay, but we would like them to subscribe to the initiative," she added. In 2002, Gerald Ssendaula, Uganda’s former finance minister, said the country's foreign debt was "unsustainable", despite the international waiver of debts for the world's poorest countries. He explained that by the end of 2002 Uganda's foreign debt had grown by an average of $108 million annually over the previous four years, while the country's earnings from exports, mainly coffee, had declined during the same period. UDN said efforts to reduce poverty were being hampered mainly by what it called "questionable expenditure patterns". This, it added, included recent government proposal to purchase luxurious vehicles for ministers and the proposed holding of a referendum to change a political system "instead of using less expensive options provided for in the constitution to change the political system." Ugandan officials said most of the savings from debt relief had been committed to education, safe water and other poverty-reduction measures. UDN also said only 6.7 percent of the roads in the country were paved, "thus the larger percentage of our roads remain in a bad state despite the government's continued spending on road maintenance." Uganda's poverty indicators show that 38 percent of the total population of 26 million live in poverty and that under-five mortality is 140 per 1,000. Only 56 percent of the rural population has access to clean water, and 53 percent have access to sanitation. "The above figures indicate that our leaders owe a lot to their impoverished people," UDN said. "We recommend that our leaders be fully committed to policies and practices that address the needs of the poor rather than the interests of the privileged few."