The Bank of Uganda Governor Dr Michael Atingi-Ego has warned against excessive domestic borrowing, which he said could push up interest rates and crowd out private sector credit.
Dr Etingi Ego made the remarks while appearing before the Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises to examine the Auditor General’s report on the Bank of Uganda financial statements for the 2024/2025 financial year.
The Committee was chaired by Kyadondo County East Member of Parliament Hon Muwada Nkunyingi with the Kira Municipality Member of Parliament Hon George Musisi as Deputy Chairperson.
The Governor who led the team appearing before the Committee, made it categorically clear that heavy government borrowing forces commercial banks to lend to the state instead of private businesses.
He disclosed that exceeding the planned Ugx 12.7 trillion domestic borrowing target will push borrowing costs higher.
Dr Atingi-Ego explained that budget execution faced hurdles from lower-than-projected domestic revenues dropping to Ugx 20.2 trillion.
He recommended for annual reviews of Uganda’s fiscal debt path and tighter oversight of government domestic financing.
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