Uganda has entered into a loan agreement with South Korea, securing $500 million to finance critical infrastructure projects. The deal was signed by Uganda’s Finance Minister, Hon. Matia Kasaija, and South Korea’s Minister of Foreign Affairs, Hon. Cho Tae-yul, during the Korea-Africa summit in Seoul.
While specific details about the infrastructure projects remain undisclosed, Uganda typically allocates borrowed funds to road and energy initiatives. However, concerns have arisen about the country’s mounting debt. As of December 31, 2023, Uganda’s public debt stood at $24.6 billion, largely driven by infrastructure investments.
South Korea’s Export-Import Bank (Exim Bank) will provide the loan, bolstering Uganda’s efforts to enhance its transportation and energy networks. The agreement signifies a strategic partnership between the two nations, aiming to foster economic growth and development.
Despite the potential benefits, Uganda must tread carefully to manage its debt burden effectively. Moody’s recent downgrade of Uganda’s country rating cited “diminished debt affordability,” highlighting the urgency for prudent financial management.
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