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Uganda Says ‘No’ To Africa’s Sovereign Debt Lure, Warns Others

Uganda Says ‘No’ To Africa’s Sovereign Debt Lure, Warns Others

From FT

Uganda is not, after all, jumping onto Africa’s sovereign bandwagon.

The East African country, a perennial candidate in the continent along with Ethiopia and Algeria to issue dollar-denominated debt, not only says that it is not ready to debut in the global capital markets but has also warned others about the dangers.

Emmanuel Mutebile, governor of the central bank, told The East African newspaper that African countries should “not be complacent about the dangers of big projects built on sovereign debt”, adding that African countries would “never again get debt relief”.

The Ugandan warning comes as two of the first African countries to tap the sovereign bond market – Ghana and Zambia – seek talks with the International Monetary Fund for financial assistance after taking on too much debt.

“From what we are seeing in Ghana, we are not yet ready to issue sovereign bonds,” Mutebile told the newspaper on the sidelines of an industry conference in Uganda.

Maria Kiwanuka, Uganda’s finance minister, added that African governments are under pressure to take on debt at market rates despite the risk of public debt rising to unsustainable levels during currency depreciation, increasing bond yields.

“At meetings of the World Bank, any minister of finance will have at least six to eight meetings on the sidelines with financial institutions,” Kiwanuka said.

Read more at FT