Uganda to borrow $412 mln from China and World Bank for health, education projects

KAMPALA, April 17 (Reuters) - Uganda said on Tuesday it intends to borrow a total of $412 million from the World Bank and China's Exim Bank to fund projects in education, health and energy sectors.

Uganda's public debt has grown rapidly in recent years on the back of the country's voracious uptake of Chinese credit, raising concerns about the impact of high debt servicing costs on government finances.

Uganda's cabinet approved a decision to borrow $200 million from the World Bank and another $212 million from Exim Bank at a meeting on Monday, the government said in an emailed statement, but terms have yet to be negotiated.

The money from the Chinese lender would partly finance connecting an additional 170,000 customers to the power grid "which will lead to an immediate growth in demand for electricity", the government said.

The funds from the World Bank would finance the construction of hundreds of secondary schools and the upgrading of 331 rural health facilities.

Concerns have been growing about Uganda's growing debt load, including from the country's central bank.

Total public debt climbed to $15.9 billion by the end of February, or 62 percent of the country's gross domestic product.

The central bank has warned that rising public debt risked pushing Uganda into default and stifling economic growth as debt servicing costs take up the lion's share of annual spending.

The opposition and other critics accuse the government of squandering an expected windfall from crude oil sales, saying rapid borrowing is effectively mortgaging the country's own future.

Officials reject that, saying it is necessary to borrow to build critical infrastructure and improve the business environment. (Reporting by Elias Biryabarema Editing by Susan Fenton)

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