Civil Society Organisations (CSOs) from East African Community are urging caution over borrowing to finance the budgets of member countries.

Members from the CSOs, made the call while meeting in Kigali to discuss the 2018/19 draft budgets that were unveiled last week.

Ministers for Finance from Rwanda, Tanzania and Uganda all presented their budgets simultaneously.

"The current challenges so far include public debt. If you look at Tanzanian, Rwanda and Ugandan economies, there is a lot reliance on borrowing and that comes with debt-repayment challenges,” Julius Kapwepwe Mashimbi the chairperson of Civil Society Advocacy Group

"If you look at the case in Uganda, the leading sector ideally in the budget is going to be debt repayment, a tune of USh10.6trillion out of the expected domestic revenue of Ush16trillion because the other money of the budget is now yours and that seems to be the picture of some African countries, Sudan and Burundi inclusive,” he added

In a bid to address issues such as infrastructure development Tanzania wants to work with multilateral lenders.

Last week, Tanzania’s Finance minister Dr Philip Mpango told members of parliament that Dar se Salaam would consider getting $1.17 billion from external loans and grants.

Also $2.54 billion would be borrowed from the domestic market while $2.01 billion from the external market.

Dar es Salaam is proposing to borrow $2.54 billion from the domestic market and $2.01 billion from the external market. In the 2017/18 fiscal year, Dar borrowed $2.17 billion from the domestic market.

While presenting the budget statement for the 2018/19 year, Kenya’s National Treasury Cabinet Secretary Henry Rotich said that $2.87 billion will be sourced from foreign lenders while $2.71 billion will be borrowed locally.

He cited project loans of $2.35 billion, commercial financing of $2.98 billion, programme support of $250 million.

Kenya’s public debt has hit $50 billion, pushed by external borrowing, which saw the total outstanding foreign debt rise to $25.63 billion at the end of February this year, according to the officials.

The country’s domestic debt as at the end of May had risen to $24.48 billion.

Rwanda’s budget this year is valued at slightly over Rwf2.4 trillion with only 16 per cent is external loans.

On foreign exchange reserves

Members of the Civil Society organisations also faulted Central banks of in EAC of not maintaining the foreign exchange reserves stressing that this is likely to affect countries should there be a downturn

"While the target is having money that can last the economy up to five months in case of shocks, the reserves for Uganda and Kenya average between 3.5 - 4 months,” he noted.

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