KAMPALA, Jan. 8 (Xinhua) -- Uganda's finance minister on Tuesday said the country's public debt is sustainable in the medium and long term, noting that there is no cause for worry.
Matia Kasaija told reporters here that the country's debt is at 41.5 percent of the Gross Domestic Product (GDP), which is below the threshold of 50 percent above which a country faces debt distress.
He said the money borrowed externally is used to invest in projects that will grow the country's economy.
Kasaija said infrastructure investments have led to sustained economic growth rates. For instance, in financial year 2017/18, Uganda achieved a 6.1 percent growth rate which was up from about 4 percent recorded the previous year.
"The expansion of the economy leads to increased capacity to collect more revenue which improves the country's ability to service its debt," Kasaija said.
Kasaija said precautionary measures are being taken by the finance ministry to prevent the hitting of debt ceiling from happening.
"If we find we are likely to hit the mark, we shall hold back. We are not going to lead the country into a debt distress," he said.
Kasaija's comments followed increased public debate about the country's local and external borrowing.
According to the finance ministry, multilateral creditors, like the World Bank and African Development Bank, have provided the largest part of government's financing.
Multilateral creditors accounted for 68 percent of total outstanding debt while bilateral creditors accounted for 31 percent and commercial banks accounted for 1 percent of the external debt stock in last financial year.
Economic experts warns that Uganda's public debt is likely to go up especially when the commercial production of oil starts.