By Billy Rwothungeyo
The debate on whether Uganda should issue a Eurobond resurfaced again with Louis Kasekende, the deputy governor of Bank of Uganda saying the country should be wary about the implications of such a move.
Speaking at a post-budget breakfast dialogue organised by Stanbic Bank at the Kampala Serena Hotel, Kasekende said the issuance of a Eurobond could increase Uganda’s debt burden.
“What this means is that it is imposing a burden on you. She (Finance minister Maria Kiwanuka) announced that it (domestic and external debt) is almost 39.8%--excluding the borrowings for Karuma and Isimba dam projects”
Kasekende went ahead to warn about the consequences of increasing debt
“It (debt) places a burden on us, the current generation and future generations. We should be careful calling for excessive government borrowing”
Patrick Ocailap, the deputy secretary to the treasury also chipped in to the debate.
“Our key message has been Eurobond, yes, but fundamentally, Eurobond when and for what?”
“It is very clear that as we move towards a monetary union, Uganda requires substantial borrowing that we may be able to sustain, without crowding out the private sector.”
Kasekende and Ocailap were responding to Phumelele Mbiyo, Stanbic bank’s regional head of macroeconomic research who opened a debate on Eurobond.
“Often, we come around here, with investors who are interested in the Ugandan economy. Some of these investors inevitably ask when Uganda will issue a Euro bond,” Mbiyo said.
Earlier this year, Uganda put on hold plans to issue a Eurobond—and instead opted to get cheap credit from China.
Neighboring Kenya recently issued an Eurobond to raise capital from the international market.