today's Pick
Uganda shelves Eurobond plans, favours Chinese loan
Publish Date: Jan 28, 2014
Uganda shelves Eurobond plans, favours Chinese loan
Keith Muhakanizi
  • mail
  • img
newvision

KAMPALA - Uganda has shelved plans to issue a Eurobond as it can borrow money more cheaply from China, a finance ministry official said on Monday.

Permanent Secretary Keith Muhakanizi said launching a sovereign bond was no longer a priority while Asia's economic powerhouse was providing loans at favourable rates.

"We have shelved the Eurobond plans for now because China is willing to give us cheaper money," Muhakanizi told Reuters by telephone.

Uganda had not set a date for a Eurobond issue but had touted the idea for a while as it gears up to becoming an oil producer as early as 2016.

Last month, Uganda received support from the International Monetary Fund to lift its ceiling on non-concessional borrowing to $2.2 billion from $1.5 billion. The IMF said this was to help fund electricity generation projects needed to close an acute power deficit.

The IMF said on Monday that despite the projected increase in external debt, Uganda's public debt would remain manageable and that the risk of debt distress remained low.

"The purpose of the financing is a good one. A more stable electricity supply would lower production costs and lead to job creation and poverty reduction," Ana Lucía Coronel, the IMF's country representative, told Reuters in an email.

Credit agency Standard and Poor's this month cut Uganda's rating to B from B+ with a stable outlook, raising its forecast for the country's budget deficit this year.

Coronel said the increase in non-concessional borrowing was related to a financing package from Eximbank China that would be at "relatively soft commercial terms."

Even though the IMF backed Uganda's increased spending plans, the Washington-based body advised the Kampala authorities to avoid fuelling inflation or crowding out the private sector, Coronel said.

Last year Uganda granted two Chinese companies contracts to build hydropower dams on the river Nile.

Government officials have said China, which has sharply stepped up investments across Africa, will help fund both projects.

One, the Karuma dam, is expected to cost $1.65 billion and will generate 600 megawatts.

Reuters
 

The statements, comments, or opinions expressed through the use of New Vision Online are those of their respective authors, who are solely responsible for them, and do not necessarily represent the views held by the staff and management of New Vision Online.

New Vision Online reserves the right to moderate, publish or delete a post without warning or consultation with the author.Find out why we moderate comments. For any questions please contact digital@newvision.co.ug

  • mail
  • img
blog comments powered by Disqus
Also In This Section
US healthcare giant Johnson & Johnson on Wednesday said it would spend up to $200 million to speed up and expand its Ebola vaccine program, with testing slated to begin in January....
Tanzania will hold a referendum in April 2015 on a new constitution, the government has announced, a move rejected by the opposition, who said Thursday that the drafting process ignored it....
Constitutional Court rules on terror suspects’ trial
The Constitutional Court has ruled that the July 2010 Kampala twin bombing suspects are detained in Uganda legally and must stand trial in the High Court....
No fresh cases of Ebola-like Marburg virus - health
Ugandan health officials said Tuesday that all suspected cases of the Ebola-like Marburg virus had tested negative and those held in isolation released....
‘I watched a crocodile eat my body parts’
IT took Godfrey Mugobi six months of treatment at Jinja Hospital and his wife could not tolerate it and she deserted him...
Museveni meets Commonwealth Secretary General
PRESIDENT Museveni and Kamalesh Sharma discussed issues pertaining to the 24th Commonwealth Heads of State and Government meeting...
Was Oscar Pistorius' 5 year sentence fair and just?
Yes
No
Can't Say
follow us
subscribe to our news letter