The 11.6 per cent expansion of Uganda’s economy following a rebase earlier last week, opens headroom for the Treasury to take up more loans without breaching the recommended debt to GDP ratio. This, however, will strain the country’s revenue basket.
The Ministry of Finance, Planning and Economic Development on Monday announced that Uganda’s gross domestic product (GDP) had shot up to Ush122.7 trillion ($32.8 billion) from Ush109.9 trillion ($29.4 billion) announced at the end of 2018/2019 financial year.
The increase was attributed to a rebasing of the Ministry’s GDP calculations to incorporate new sectors such as gold exports and oil activities whose output had grown in recent years.
The rebase means that the country is using the latest data to better estimate the size of the economy.
Uganda’s debt to GDP ratio which had previously been estimated at 42.1 per cent dropped to 37.2 per cent after the rebase.
The International Monetary Fund in May projected that Uganda’s debt would rise above 50 per cent of GDP by 2021/22, breaching the level beyond which debt is considered to be unsustainable in developing economies.
Economists, however, say the rebasing is of little significance.
Dr Fred Muhumuza for example equated a rebase to changing from a swimming costume back into normal clothes.
“They could look bigger but in actual sense they are still the same person,” he said, “of course it may help the government to adjust areas where they could have over-estimated or under-estimated,” Dr Muhumuza said.
Chris Mukiza the Uganda Bureau of Statistics (UBOS) Executive Director, says the size of the economy was revised upwards because they had under-estimated the growth of the 2016/17 financial year by 18.3 per cent.