Uganda has applied to the International Monetary Fund (IMF) for a $900 million loan to help bolster its shaky finances after the COVID-19 pandemic hammered its economy, a top finance ministry official said on Wednesday.

“We have applied, negotiations are ongoing,” Deputy Treasury Secretary Patrick Ocailap told Reuters.

“We have not yet concluded negotiations on the loan but we hope it will be approved soon.”

The loan would be for general budget support and would be disbursed over three fiscal years, he said. The country’s next fiscal year starts in July.

Uganda imposed one of Africa’s tightest anti-coronavirus lockdowns, which included a shuttering of all businesses except the most essential. Economic activity subsequently nosedived, with GDP contracting by 1.1% last year.

The IMF loaned Uganda $491.5 million dollars last year, one of several loans the country secured from various sources to help absorb the economic blow of COVID-19.

A new loan will potentially add to growing worries about Uganda’s ability to service its ballooning debt, seen surpassing 50% of GDP by June.

Last month the east African country said it may approach its major creditors to negotiate a possible suspension of loan repayments after its debt load ballooned by 35% in a single year. read more

As at December 2020 Uganda’s total public debt stood at $18 billion, two thirds of which is held by external creditors, according to the finance ministry.

 

Reuters