Reasons for/Causes of a huge Public debt (budgetary deficits) in Uganda (LDC’s)
- Low tax base. This is due to a narrow range of tax sources which limit the tax revenue. This forces the government to borrow hence a huge public
- High levels of inflation in the country. This leads to loss of the real value of the government revenue making it difficult to finance the estimated expenditure hence
- Persistent debt servicing. The need for the government to repay the debts contracted in the past forces it to continue borrowing hence a huge public
- Great demand for investment in the presence of low savings. This forces the government to borrow in order to close the savings investment gap through borrowing hence a huge public
- Political instabilities and insecurity in the country. This forces the government to borrow in order to finance wars and maintain the army hence increasing the public debt burden.
- Increased expenditure on the adverse effects of unforeseen circumstances. For example famine, drought, floods, epidemics etc. This forces the government to borrow in order to cater for people affected by such
- Under taking over ambitious projects like Universal Primary Education (U.P.E), Universal Secondary Education (U.S.E), and Poverty alleviation programs etc. without enough resources. This forces the government to borrow hence a huge public
- Misuse of public funds through corruption and embezzlement. This leads to wastage of scarce government resources meant for productive activities hence continued borrowing.
- Huge government administrative expenditure in form of salaries and other allowances on politicians and civil servants. This is reflected by a big parliament cabinet. This forces the government to borrow in order to meet such recurrent ·
- The large number of government activities. For example presidential and parliamentary elections, presidential trips which require too much spending hence borrowing.
- High population growth rates leading to high dependence burden. This forces the government to borrow in order to cater for the social needs of the rapidly growing population e.g. education, medical care
- Excessive capital out flow inform of profit repatriation. This leads to loss of public revenue hence balance of payment deficits for the
CATEGORIES Economics
TAGS Dr. Bbosa Science
