Payment of reparations to DRC falls due amid World Bank sanctions

On September 1, Uganda must deposit the second installment of $65 million to the Democratic Republic of Congo (DRC) as reparations for its troops’ occupation of DRC back in the 1990s. This comes at a time when the World Bank has just announced sanctions to Uganda precipitated by the enactment of the Anti-Homosexuality Act, 2023.

The International Court of Justice (ICJ) ordered Uganda to pay DRC a total of $325 million to DRC as compensation for losses caused by wars in the 1990s when Ugandan troops occupied Congolese territory.  The first instalment of $65 million was paid on September 1, 2022 and the second instalment shall fall due on September 1, 2023 and must continue to be paid over 5 years.

The ICJ assessed $225m for “loss of life and other damage to persons” that included rape, conscription of child soldiers and the displacement of up to 500,000 people. It assessed another $40 million for damage to property and $60 million for damage to natural resources, including the plundering of gold, diamonds, timber and other goods by Ugandan forces or rebels they supported.

Payment of the reparations is now the burden of all Ugandan whilst none of the men and women that participated in the crimes and plunder of DRC resources have never been brought to book and may not be anytime soon.

It also remains unclear what the government in DRC is using the paid reparation for. There is a possibility that the money ends up financing self-interests of the ruling class and/or senior technocrats.

Payment of reparations compounds the already worrying situation Uganda’s economy is in as a consequence of World Bank sanctions. And there is a possibility that the International Monetary Fund (IMF) may follow suit.

This financial year (2023/2024), Uganda’s public debt increased from 48.4 per cent to 53.1 per cent of the Gross Domestic Product (GDP). This means that it is at a level where it is becoming unsustainable.

According to the IMF, for a debt to be sustainable, particularly for a developing country like Uganda, it must not exceed 50 percent of the country’s Gross Domestic Product-GDP. The stock of public debt increased from $19.54 billion in June 2021 to $20.99 billion in June 2022. As a share of GDP, public debt increased from 46.90 percent to 48.4 percent over the same period.

Per the 2023/2024 budget, the country will spend almost $2.50 billion on debt repayment and servicing. This represents 16 percent of the whole 2023/2024 financial year budget. The assumption is that the figure should include the $65 million for reparations to DRC.

Records from the central bank (Bank of Uganda) show that Uganda’s public debt is standing at close to $22 billion which is approximately 50 per cent of the GDP. Uganda’s debt servicing in the previous financial year 2022/2023 was at a ratio of tax revenue estimated at 30 percent and this suggests that any further borrowing with associated servicing in the short to medium term would constrain government development efforts.

According to reports from local media in Uganda, President Yoweri Museveni has in the wake of World Bank sanctions directed the Prime Minister, Hon. Robinnah Nabbanja to ensure that that Government practices frugality as a way of bridging the gap created by the sanctions.

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