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Inside Story: Uganda’s public debt management and health financing in Uganda

Uganda received several credit facilities from China, the World Bank and IMF including USD 1 Billion for post-COVID recovery in 2021. The latest USD 240 million, received in January 2023, was the final payment under the 2021 loan.

Uganda had a big debt from its colonial government when it got independence in 1962, but it grew very quickly between 1966 and 1986. Massive corruption, political unrest, and war slowed down economic growth and made it harder to collect taxes during this time.

Also, Uganda’s manufacturing sector wasn’t grown enough by the British colonial government, which made the country too dependent on imports and hurt its ability to collect taxes. Between 1986 and 2006, Uganda’s debt got even worse because coffee prices dropped sharply in the 1980s and 1990s, and a lot of money had to be spent to rebuild an economy that had been destroyed by war. In fact, Uganda’s debt to GDP ratio rose from 31% in 1987 to 109% by 1992.

Because Uganda’s debt grew so quickly, the Paris Club rescheduled loans for the country in 1989 and 1992, but it was too late. The country got rid of all of its debt in 2006 through the Multilateral Debt Relief Initiative. However, because the country had so many lenders, this only lowered its debt by 20%. Uganda’s debt to GDP rates keep going up, even though the economy is growing. In 2022, they will reach 57.9% of GDP, up from 45.1% in 2019.

Uganda got a lot of loans from China, the World Bank, and the IMF, including USD 1 billion in 2021 to help with recovery from COVID. The last payment on the 2021 loan was USD 240 million, which was sent in January 2023. Uganda, on the other hand, still has a lot of crime, which makes it hard to manage money well. Uganda is the second country in East Africa to get the most loans from China. Between 2015 and 2020, 33.9% of all Chinese loans in the region went to Uganda.

The IMF and World Bank have often said that improving government, accountability, and transparency is one way to make public spending and debt management more efficient. The IMF and the World Bank both say that Uganda has a modest risk of debt damage. But the fast rise in debt levels makes it possible to get into debt trouble.

The anti-LGBTQ law that was passed in May 2023 is against the bank’s values, so in August 2023, the World Bank said it would stop giving money to Uganda. Uganda had to change its budget because of changes in the money that was available. Other institutions, civic groups, and states have also said they might stop giving the country help and loans, saying that projects would only be funded if they were good enough.

Amount of disease

Up to half of all deaths and illnesses in Uganda are caused by communicable diseases like HIV, TB, and malaria. 30% of deaths are caused by diseases that don’t spread. Kenya’s health spending has also been strained by repeated Ebola outbreaks and COVID-19. It is thought that 47 million people live in Uganda. The UN Children’s Fund (UNICEF) says that 438 out of every 100,000 live births in Uganda are deaths of mothers and 90 out of every 1000 live births are deaths of children younger than 5 years old. Also, 29% of children in Uganda are considered stunted, which is one of the highest rates of starvation in Africa.

Uganda has worked to improve its health system with help from the World Bank. Lack of resources, such as limited budgets, tax evasion, and rising debt, keeps getting in the way of growth. One example is that tax evasion costs about 12% of tax revenue, while debt payment costs take 30% of tax revenue. This makes it harder to spend in public goods and services because money has to be used to pay off debts and interest.

Uganda also loses money that it could have made because of tax breaks, tax incentives, and deals that tax people twice. In 2023 and 2024, exemptions brought in an average of USD 14.8 billion more than the main healthcare spending. Oxfam thinks that Uganda will lose 6% of its expected tax revenue, which is equal to 2% of its health spending, because dividends are not taxed. There is only one oil exploration spot that this applies to.

Indirect taxes, mostly taxes on spending that everyone has to pay, bring in 64.4% of Uganda’s money. The poor are hit the hardest by this because they have to spend more of their cash on things like food.

Money for health care

Articles IX and XX of Uganda’s Constitution say that the country has to make sure that everyone has access to health care. Article 8 of the UN Declaration on the Right to Development, the African Charter on Human and Peoples’ Rights (ratified in 1986), and the UN International Covenant on Social, Economic, and Cultural Rights (ratified in 1987) all set duties for the state. These include paragraph IX of Article 8 and others. This right has not been fully realized yet, though, because of debt and a lack of resources.

The Uganda Insurance Regulatory Authority (UIRA) says that less than 1% of Ugandans have their own health insurance. To deal with this, the government is currently setting up the National Health Insurance Scheme. Right now, 41% of health care costs come from people’s own pockets. Poverty levels that are too high and inflation rates that are 10% have made it hard for people to afford food and other basic items, let alone health care.

Global problems like the war in Ukraine, COVID-19, and climate change continue to make it harder to collect taxes and raise the amount of money that needs to be spent, especially on adapting to climate change. Because public health isn’t getting enough money, more than 24 million people have to go to private facilities, which are out of reach for the poorest and most vulnerable. This shows that more work and money need to be put into making universal health care (UHC) better and more accessible to more people.

Uganda’s total budget went up by 47% in 2022/2023, but the health budget only went up by 0.7%. Even though it went up, at 7.7% of overall spending, it is still less than the 15% that the Abuja Declaration calls for. Lots of people give money to health care. People and private groups also have a part to play in providing health care. Donor money for health care reached a high point during COVID-19, making up 66% of the budget. However, continuing to rely on donors is usually not possible and can’t be predicted.

How to pay for health care in Uganda in the future

Because of these things, Uganda needs to quickly and correctly put into action its health financing strategy, which is a plan for getting resources to the field. Aside from that, Uganda needs to promise again to provide everyone with timely, sufficient, high-quality, easy-to-reach, and accepted health care, as required by its own constitution, international human rights law, and the Abuja Declaration. To do this, a lot more money needs to be spent on updating health infrastructure, making medical and drug supplies stronger, improving UHC (including primary healthcare), making health insurance more affordable for more people, and making disease surveillance systems better. To fix the problem of health funds running out, Uganda’s creditors need to work with the country to forgive debts, restructure debts, and move resources back to health. Fighting corruption, making resource management more open and accountable, and speeding up tax changes to deal with indirect taxes, exemptions, tax evasion, and tax avoidance will all help make more money available for health investments.


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