Uganda to Raise More Concessional Loans for Infrastructure Plans

  • Nation building power plants, highways, upgrading airport
  • Uganda's economy to expand 5.8% in 2016-17 on public projects

Uganda will increase concessional borrowing by more than a quarter in the coming budget year to fund infrastructure projects, the Finance Ministry said.

Africa’s biggest coffee exporter may raise $908 million of concessional loans from multilateral agencies in the 12 months through June 2017, compared with $720.2 million approved in the current fiscal year, the Kampala-based ministry said in a budget document published on its website.

Key projects planned by the government include the construction of the 600-megawatt Karuma and 183-megawatt Isimba hydropower plants, a proposed standard-gauge railway linking the country to the port of Mombasa in neighboring Kenya, two highways and the rehabilitation of Entebbe Airport, the ministry said.

The East African nation is on the cusp of becoming an oil producer, with companies including London-based Tullow Oil Plc, China National Offshore Oil Corp. and France’s Total SA jointly developing the nation’s crude finds of 6.5 billion barrels of oil resource.

Grants Falling

In addition to concessional loans, the country may receive $330.8 million in grants next financial year, down from $376.8 million projected in 2015-16, according to the document. External funding will drop in 2017-18 on account of lower grant and concessional loans, it said. Multilateral lenders to Uganda include the World Bank, the African Development Bank, the Islamic Development Bank, the Kuwait Fund and the European Development Bank.

Uganda may face a reduction in aid flows after the World Bank last month canceled a transport project over contractual breaches, NKC African Economics, a Paarl, South Africa-based company, said in a research note Tuesday.

Total revenue for 2016-17 is projected to climb to 19.7 trillion shillings ($5.82 billion) from 18.6 trillion shillings this year, the ministry said. Domestic revenue may rise to 12.4 trillion shillings from 11.3 trillion shillings, it said.

Growth in Uganda may accelerate to 5.8 percent in 2016-17 from 5 percent this fiscal year, driven by public-infrastructure spending, the ministry said.

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