Analysis of the effects of external public debt on Ugandan economy for the period 2003-2021

Abstract

The main aim of the study was to analyze the effect of external public debt on the Ugandan economy for the period 2003-2021. The study majorly focused on the key aggregates of the economy that is to say economic growth measured as GDP and the inflation rate measured as consumer prices A Multiple linear regression model was used to establish a relationship between the main and specific objectives. The variables considered were external debt, economic growth, and the inflation rate within the period 2003-2021. The data used relied on secondary sources from World Bank, International Debt Statistics, BOU, IMF, and FPED. Before the regression analysis was run some data diagnosis tests were carried including tests of normality, multicollinearity, stationarity, and serial correlation. The study findings revealed that both economic growth and inflation exhibited a relatively strong negative relationship with External debt of 1.22 and 0.68 respectively all data on external debt, economic growth, and inflation rate with probability values of 0.2793, 0.5298, and 0.1619 respectively had a nearly normal distribution since their Skewness and Kurtosis was statistically insignificant (greater than 0.05). According to the researcher, to realize economic growth and price stability, the government should ensure economic and political stability to enjoy the benefits of external debt and make the debt burden minimal, the government should also acquire external debt largely for economic reasons rather than social or political reasons, this would increase the productivity of the nation.