Govt borrows Shs477b to refinance maturing debt

Finance Minister Matia Kasaija. PHOTO/ FILE

Summary

Debt refinancing refers to the replacement of existing debt with debt

By MARTIN LUTHER OKETCH

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KAMPALA. Government issued Treasury Bills and Bonds during March as it sought to mobilise Shs407.5b to refinance maturity debt.   
Details which are contained in the April Ministry of Finance Performance of the Economy report, indicate that Shs884.58b (at cost) was raised, of which Shs423.05b was from T-Bills while Shs461.5b was from T-bonds.
 
Of this, Shs477b was used to refinancing of maturing debt while Shs407.5b went towards financing other items in the budget, according to the report. 
Debt refinancing refers to the replacement of existing debt with debt. 

According to the report, there were two T-Bill auctions and one T-Bond auction in the primary market during April 2021. 
The report also noted that yields on Treasury Bills edged upwards for the 91-day and 364-day tenors while the 182-day tenor registered a decline.  
Annualised yields to maturity for April were 7.20 per cent, 10.22 per cent, 11.79 per cent for the 91, 182 and 364-day tenors, respectively. 

This was an increase from 7.18 per cent, 10.45 per cent and 11.70 per cent, respectively during March. 
Meanwhile, the report noted continued recovery in economic activity with the Purchasing Managers Index , which is a key economic indicator, rising to 57.8 in April from 53.2 in March, which was well above the 50.0 threshold. 
The indices, had dropped in January but had recovered over the period to record an average of the index of 53 since June 2016. 

The improvement, the report noted, signified a third successive monthly improvement in business conditions as both new orders and output increased across each of the five broad sectors covered by the survey. 
“This is attributed to a rise in consumer demand amid normal operating conditions which enabled companies to expand business activity in April 2021,”said the Ministry of Finance.  

The Composite Index of Economic Activity, which is another measure of economic activity, stood at 143.4 in March up from 141.9 in in February, reflecting a pickup in economic activities following the conclusion of elections.
The report also noted that sentiments in doing business remained positive during April with business executives expressing high optimism in the next three months. 

good performance
The services sector, agriculture and manufacturing, according to the report, are expected to register good performance over the period due to an increase in demand.