Hydropower plants likely to narrow Uganda budget deficit

3 Jan 19

Uganda’s budget deficit could narrow to 6% of gross domestic product in the next year due to investment in large hydropower projects, it has been reported.

According to Bloomberg, the financing gap in the 12 months to June 2020 may drop from 6.6% of GDP this fiscal year as the government concludes two megawatts plants.

This gap is expected to gradually narrow to 2.6% in 2023-24 according to pre-budget documents from the finance ministry cited by Bloomberg.

The energy infrastructure is expected to boost the economy by giving more people access to electricity, reducing inequality between rural and urban areas and creating jobs.  

Uganda is expecting to see its resources next year rise to 34.3 trillion shillings (9.27bn) from 32.7trn shillings ($88bn), Bloomberg said.

The country is also allocating 2.9trn shillings for interest payments in the next fiscal year of which approximately 402bn shillings will be for external loans.

Uganda’s economy grew at a slower pace in recent years. In the five years to 2016, average annual growth was 4.5%, compared to 7% in the 1990s and early 2000s, according to the World Bank.

In September the Ugandan finance ministry outlined the key focus areas for the 2019-20 financial year. This included investing in health and education, strengthening public sector management and improving the domestic revenue services.

Construction of the 600-megawatts Karuma and 183-megawatts Isimba plants began in 2013 and opened last year.


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