Uganda’s domestic arrears increased by 94 per cent to Ush2.7 trillion ($741.8 million) by the end of 2015/16, according to a new report by the International Monetary Fund.
The report cited court awards and compensation and pension claims as the largest contributors to the country’s short-term obligations.
Domestic arrears refer to short-term debts incurred by governments against unpaid procurement invoices for supply of goods and services during the financial year.
The report titled Uganda: Managing and Preventing Expenditure Arrears and dated March 2017, was authored by Amitabh Tripathi, Paul Seeds and Carole Pretorius. It shows that the country’s total domestic arrears represented 3.2 per cent of GDP in 2015/16.
Overall domestic arrears amounted to Ush1.39 trillion ($285.5 million) in 2014/15, a figure equivalent to 1.78 per cent of GDP.
In 2013/14, Uganda’s domestic arrears amounted to 1.43 trillion ($392.9 million) representing 2.03 per cent of GDP, according to the report.
The huge spike in domestic arrears experienced in 2015/16 was largely attributed to a presidential pledge tied to payment of gratuity and pensions for veterans during the run up to the previous general election held in February 2016.
This alone accounted for 40 per cent of the increase followed by court awards and rising interest costs attached to them.
Recognition of new arrears linked to Kyambogo University and Uganda National Examinations Board and arrears triggered by past salary increments awarded to Makerere University teaching staff, among others cap the picture.
The report shows that court awards accounted for the biggest portion of domestic arrears with a share of 25.3 per cent by end of June 2016 followed by pension and gratuity claims with a share of 22.1 per cent while development and other recurrent financial arrears held a share of 13.4 and 13.1 per cent respectively.