* Country targets crude production in 2020
* IMF says reliance on foreign credit "unworkable"
* Uganda's total external debt stood at $10.3 bln in May
(Adds background on IMF concerns about Uganda's reliance on
By Elias Biryabarema
KAMPALA, March 22 Uganda says it has asked China
for a $500 million loan to help build almost 600 km (360 miles)
of roads in the country's oil-rich west, amid concerns that the
country's heavy reliance on foreign borrowing could lead to a
spike in debt.
Uganda has discovered an estimated 6.5 billion barrels of
crude reserves on its Albertine rift basin along the border with
the Democratic Republic of Congo.
However, lack of infrastructure, such as roads and an export
pipeline, as well as disagreements between the government and
international oil companies over taxes, have repeatedly delayed
The Uganda National Roads Authority needs the money to build
580 kilometres of roads around the area, said Mark Ssali, head
of public and corporate affairs at the state-run UNRA.
"There have been some contacts with Exim Bank (of China)
for the loan," he told Reuters in an interview on Wednesday.
"But we are currently procuring a Chinese contractor, which is a
precondition for any concrete talks with Exim."
Uganda wants to start oil production in 2020, when a
pipeline through neighbouring Tanzania is set for completion.
China has extended large lines of credit to Uganda in recent
years, mostly for infrastructure, including power plants, roads
and an airport refurbishment. Officials have also said they are
seeking $2.3 billion to build a standard gauge railway.
In January IMF managing director, Christine Lagarde, said
Uganda needed to use more of its domestic funds to finance
infrastructure development and that reliance on foreign credit
Government critics and the opposition say the appetite for
Chinese credit risks dragging the country back into the deep
indebtedness of the mid-2000s.
"Given the accelerated borrowing and misuse of loans, we're
likely to go back into debt distress," said Julius Kapwepwe,
director of programs at Uganda Debt Network, a think tank that
tracks Uganda's public debt. "We might start begging for debt
According to Central Bank of Uganda data, the country's
total external debt stood at $10.3 billion in May last year,
compared with $3.8 billion in the financial year ended June
(Reporting by Elias Biryabarema; Editing by Aaron Maasho and