June 11, 2020 / 1:35 PM / a month ago

Uganda to boost external funding to shore up budget

FILE PHOTO: Uganda Minister of Finance Matia Kasaija displays a briefcase carrying national budget before presenting it to the nation during a budget speech in Uganda's capital Kampala, June 11, 2015. REUTERS/James Akena/File Photo

KAMPALA (Reuters) - Uganda plans to draw on more external financing to shore up its 2020/21 budget, its finance minister said in a budget speech on Thursday as he outlined measures to help businesses hit by the outbreak of the new coronavirus.

The 45.5 trillion shilling budget ($12.2 bln), up from 40.1 trillion last year, includes 12.4 trillion shillings of external project support and general budget support compared with 10 trillion in 2019/20, said Finance Minister Matia Kasaija.

“Government’s approach to public debt financing ... seeks to contract only affordable external debt in preference to domestic debt,” he said.

He said the government plans to cut taxes on mobile banking and mobile money transactions, give credit to small- and medium-sized firms through cooperatives, ask banks to restructure distressed loans and clear arrears to government suppliers.

The payment of taxes has also been deferred for some sectors.

Uganda’s total public debt stood at $13.3 billion in December 2019, of which $8.6 billion was external debt.

Kasaija did not mention seeking to delay or restructure loan repayments in his speech.

Reporting by Elias Biryabarema; Writing by Katharine Houreld; Editing by David Clarke

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