Opinion: It has now been 425 days without a Governor of the BoU…

“The appointment of the Governor is a prerogative of H.E the President subject to Article 161 of the Constitution of the Republic of Uganda, which states that; the governor, the deputy governor and all other members of the board shall be appointed by the President with the approval of Parliament. To that effect, if the Governor dies, resigns, or otherwise vacates office before the expiry of the term for which he or she was appointed, the President may appoint another person in his or her office, and the person so appointed shall hold office for the unexpired period of the term of office of the person in whose place he or she is appointed. In the absence of the Governor, the Deputy Governor will perform the duties of offices of the Governor and Deputy Governor until the new Governor is appointed. Indeed, The Bank is currently operating efficiently under the direction of the Deputy Governor. He is supported by a team of Executive Directors and technical officers. The appointing authority – H.E. will the right time and moment, appoint a Governor. So let us wait on him” (Bank of Uganda, 23.03.2023).

Since the 23rd of January 2022, the Bank of Uganda has been without a Governor. The Deputy Governor has run the Bank since then. It has been 425 days or 1 year and two months without an appointed governor. That is really telling and compelling that the President haven’t appointed anyone for so long.

The Bank of Uganda is clearly not a priority, because By-Elections and getting people elected to office is coming first. The appointments of Speakers and other high ranking official roles gets pushed instantly. However, the BoU can just live without a head and a master at the helm. The Deputy can steer the ship and without question too, apparently.

You know the mission of the BoU when it states this:

“The Bank of Uganda (BoU) is the Central Bank of the Republic of Uganda. It was opened on August 15, 1966. It is 100% owned by the Government of Uganda but it is not a government Department.  Bank of Uganda conducts all its activities in close association with the Ministry of Finance, Planning and Economic Development(MoFPED). Bank of Uganda is responsible for the formulation and implementation of monetary policy as well as regulating & supervising financial institutions” (BoU – ‘Overview – About BOU’).

It isn’t just a run-of-the-mill organization, but a vital one. It is the place for monetary policies and uphold the national currency. The BoU is by just these things an important piece of the puzzle in the Republic. That’s why its extra weird that it has been without a leader or a governor for over a year.

This shows that the President is just waiting and waiting. That the President isn’t mindful or caring about the concerns of the BoU. When he cannot find a suitable character or leader to become the next the Governor. We know he kept the previous Governor from 2001 until his death in 2022. So, he enjoyed the loyalty and the work of the predecessor. However, that shouldn’t stop His Excellency from appointing another one.

“The appointing authority – H.E. will the right time and moment, appoint a Governor. So let us wait on him” (Bank of Uganda, 23.03.2023).

It is just foolish that the institution and national bank is waiting this long for a new governor… seriously this is bonkers. 425 days and counting without a head or the appointed chief. This just shows that the President doesn’t think this is important or that serious. Peace.

The Art of Deficit Financing: Budget 2022/23 and the worrying affects of the growing debt…

The proposed budget for FY2O22/23 hos increased to UGX 47.25 trillion from the approved budget of UGX 44.77 trillion in FY2O21/22. ln the proposed budget, recurrent expenditures amount to UGX 33.54 trillion (71%) while development expenditures amount to UGX 13.70 trillion (129%). Worryingly, the projected revenue collections of UGX 25.54 trillion cannot fund the country’s entire recurrent expenditures” (Opposition Response to the Annual Budget Estimates for FY 2022/23, 03.05.2022).

When you read the first numbers on the Budget for the Financial Year of 2022/23 you see a problem that has been a long lingering issue. The National Resistance Movement (NRM) and Government of Uganda (GoU) has done this for several of years now. The state has banked on loans and grants to cover the deficits. While the state is budgeting with a deficit financing method, which is far from covering fiscal funds by the lack of domestic revenue. That’s why the rising debt and the cycle of recycling debt isn’t making things better.

Just read this paragraph here:

It is critical to note that debt management costs hove risen from UGX 8.58 trillion in FY2017/18 and ore projected to be UGX 15.94 trillion in FY2022/23. This translates to on increment of 86%. The costs take first coll on the budget to cater for interest payments, commitment charges, debt management fees and amortisation. Therefore, from the onset 33% of the proposed budget will

not be available for service delivery. instead, it will be utilised for payment of partial debt commitments” (Opposition Response to the Annual Budget Estimates for FY 2022/23, 03.05.2022).

Just seeing this number, as you see the lack of domestic revenue to cover the budget of 47 trillion shillings, which is only at the level of 25 trillions. While the project debt management is put to about 16 trillions shillings. That means most of the domestic revenue would be used to pay old debt. Unless, the state plans to take out more loans and recycle debt to pay the old debt. That is just pushing the problem further down the line and get more interests as well. Therefore, the state finances isn’t tricky anymore, but a tragic phenomenon. These sorts of numbers are getting closer to default and a possible debt trap at one point. As the state needs more loans to cover current loans. That is not how to run a nation and neither how to run a fiscal responsible government.

The numbers becomes even more striking:
“The advance effect of this astronomical level of borrowing is felt through interest payments of over UGX 5.5 trillion in FY2O22/23 rising from UGX 2.4 trillion in FY2017/18. An increment of 130%. This is coupled by external debt repayments that ore projected at UGX 2.4 trillion in FY2022/23 rising from UGX 589 billion in FY2017/18. An increment of 307%. These toke first coll on the revenue collection and reduces funds available for service delivery” (Opposition Response to the Annual Budget Estimates for FY 2022/23, 03.05.2022).

We see the debt management and now we see the rising interest payments are also doing the same. The ones that has been crying wolf and worried for the rising debt portfolio is catching up with the government. The Ministry of Finance and Planning and Economic Development (MoFPED) has failed to comply with the mechanisms and the codes of Public Finance and Management Act. Clearly, the Government and the all the Ministries has to be following suit.

These sorts of numbers should strike fear of a debt default and a crashing economy. The art of deficit financing … is now becoming a growing issue. The state cannot hide from this and this should worry the citizens. As there is nothing given that the creditors will be merciful or give way. They might … be vengeful and take collateral over failure to repay the debt. Peace.

Russia: Zakharova spells doom and gloom over the West because of the sanctions…

The results of a European Council meeting, held jointly with the US leadership, confirmed once again that the collective West needs Ukraine which is fully under the control of Washington and is gripped by Russophobia only as a geopolitical battering ram against Russia” (…) “While declaring the readiness for new anti-Russian restrictions, Brussels forgets to add that their approval will be advantageous only for the US, that gains on the outflow of capitals from the EU, on an increase in supplies to the European markets of their arms and liquefied natural gas at jaw-dropping prices” (…) “Through their actions, officials in Brussels are in fact undermining the economy of European Union countries” (…) “They doom rank-and-file Europeans to the demolition of a socially oriented economic model, to life in conditions of exorbitant prices for electricity and fuel, cuts in social payments in favor of military budgets, galloping inflation and mass unemployment” – Russian Foreign Ministry Spokeswoman Maria Zakharova (28.03.2022).

The ironies of this uttering is ridiculous … as the sanctions are hitting the Russian financial market and the possibility for trading with the West and the United States of America. That the Russian Foreign Ministry Spokeswoman Zakharova is doing this to spread fear. Like the sanctions are supposed to backfire and the European Union (EU) isn’t considering the implications, the prices and possible inflation.

Zakharova can say these things… but Europeans know they will pay a price over the sanctions. Many are prepared for it and also know it is coming. Everyone can see it from a mile away. It is inevitable, as the sanctions and the lack of gas to the market. The prices will become higher and the EU Member States has to subsidize and find other solutions to fill in the gap. This is why we know it isn’t an overnight solution or find a measure that can solve the energy crisis this has created.

However, it isn’t doom and gloom yet. The EU and the Member States are finding new measures and means to an end. It isn’t like they want to be addicted to the Russian oil and gas anymore. They know the consequences of buying it and feeding the Russian state with this foreign currency. It makes the Russian state able to fight illegal wars like the one in Ukraine.

Zakharova acts like the EU and NATO isn’t amping up the Military Budgets in reference to the war itself in Ukraine. That is connected to the war and as a reaction to the invasion of Ukraine. This is all inter-connected… and it is not like coincidence that the EU nations does it now. They are seeing the bombing, destruction and the war that Russia is willing to do. Therefore, the nations are in association and seeing the need to address it with higher military budgets. Because, they fear that Russia might find reasons to target others…

So, the Russian Ministry of Foreign Affairs better find arguments that can be validated. Nevertheless, I don’t expect it….

Zakharova thinks the Europeans will believe the propaganda and Kremlin messaging. Well, I hate to break it too you, but we won’t. That is not happening. This is empty words with no flair or finesse. It is just like the spokeswoman doesn’t think EU and U.S. can prepare or consider the implications of what they are doing. Like they are foolish with no mechanisms or even studying the sort of backlash a sanction package could have on themselves. It is just like no one else thinks… but Putin and the mighty Kremlin.

I beg to differ, but that is maybe just me. Zakharova is trying to spread fear… with doom and gloom. I am awaiting Armageddon and the sky is supposed to fall on our heads. Until that happens, I am sure Europeans can pay more for gas and electricity. While Russians can have empty supermarkets and try to get substitutions of Western products and the quick tanking of local economy, as a real consequence of the invasion of Ukraine. Peace.

Opinion: The Russian economy is tanking when the pension fund is used to save Russian companies

Putin signed a law allowing the placement of NWF funds in shares of Russian companies and government securities” (RIA Novosti, 09.03.2022).

What is the National Wealth Fund:

The National Wealth Fund (NWF) is a part of federal budget assets. NWF is dedicated to support pension system of the Russian Federation to guarantee long-term sound functioning of the system. Fund’s primer assignments are to co-finance voluntary pension savings of Russian citizens and to balance budget of Pension Fund of the Russian Federation” (NWF – About).

Things are not looking good financially in Moscow or in the Russian Federation. As the Russian invasion of Ukraine is costing the Russian a fortune. They are losing contracts, businesses and ability to trade like never before. Foreign companies are stopping to trade or even do business in Russia. Everything from importing vehicles to having a latte at Starbucks. All sort of European and Multi-National Corporations are stopping. They cannot even listen to Spotify anymore. That’s how things have moved.

This is taken to such an extent that the financial inclusion with the rest of the world is gone within 14 days. It took only two weeks from the Western corporation to see the light and bail out. They are ensuring the Russians doesn’t have the liquidity or equity, heck even the ability to transfer funds to cover the basics. The rouble is devalued and the rating of government bonds is also failing.

So, things are grim when the Russian Federation is blocking the ability to take currency across the border. Neither is the SWIFT working in various of banks. The U.S. is planning to stop the imports of oil. While there is still in the works to stop gas from being exported to Europe. If that all succeed the Russian will have less or lack foreign exchange. The dollarization of the economy is just gone. The Petrodollars and whatnot just vanished.

Yes, the Russians are connecting to the MIR System instead of VISA/Mastercard/American Express, but that is only by default and not because the Russians wants to. Yes, the Eurasia enterprise between Russian and China is good for business there. However, it will not be accessible in the West. This will only be with the few partners of Russia, which is a few former USSR republics and China. Not a giant market or a way of patching the obvious hurt.

You know things are bad when the President has to order the spending of the pension funds to salvage the Russian corporations. That shows there is severe problems and crippling financial structure only after a two weeks. This is really costing the companies and the state. As the NWF hav to cover the sudden lack of cash flow and keep things a float.

I am sure not all people will cry over the loss of Coca-Cola or McDonalds. However, it is a sign of the times ahead. The Russian economy isn’t boosted or been prepared for the severity of sanctions this time around. If they were.. the NWF wouldn’t be accessible as a form of covering over the lack of funding and saving companies. It is not done in good will, but of necessity. You don’t spend the collected pensions of your citizens on failing corporations for fun, but because you have too.

This is showing what sort of consequences the war has on the markets. As they are failing and now the state has to bail it out. That is a financial crisis and you have resorted to these means, if you didn’t have too. Peace.

Opinion: The Budget for the FY 2022/23 lacks 2,6 Trillion shillings!

We know that the state during the recent years have been running on deficit financing. This means it takes up loans to pay up for new loans to pay recurring expenditures. The state follows up this negative spiral of lacking of funds to ask for more expenditure than it has funding for. This means, the state is fiscally indisciplined and misusing funds, as they have to later find sources of revenue or take up more loans to fulfil the voted expenditure it has.

That isn’t a sign of a growing economy, but a way to further more loans and add more debt, which has to be paid back with interests in the coming years. As the parts of the government budgets are becoming more expensive, as the state has to fulfil and repay on the debts it has already taken out over the years.

The Minority Report states this:
“The government contradicted itself when it indicated that there would be limited supplementary budgets in FY2022/23 but at the same time elaborately articulate unfunded priorities or additional expenditure needs of UGX 2.62 trillion. Unfortunately, the majority report is silent on this fiscal indiscipline. The indiscipline of supplementary budgets is bound to continue and government hos sent indications that a minimum of UGX 2.62 trillion will be sought in due course” (A MINORITY REPORT ON THE NATIONAL BUDGET FRAMEWORK PAPER FOR FY 2022/23 -2025/26, January 2022).

This here should create headlines, because this is planning to take out loans to cover the current debt, which this will be. Since the state needs borrow or take up loans to cover these expenses. This just show how reckless the state is carrying it’s budgets.

As it can create 2.6 trillion shillings without having any sort of funds or revenue to ensure it. Which means someone else has to foot the bills currently. A creditor will take the debt and make sure the state can pay for the expenses. However, the future citizens has to repay for this and that is fiscal indiscipline and deficit financing. As the deficit needs financing and the shortfall has to be covered, which tends to be covered by debt.

This is unserious of the government and a sign of worry. As they are doing this on the first budget for the financial year and we can know additional supplementary budgets will most likely become bigger than two trillion shillings. We should expect more and the shortfalls might become worse, as all revenue isn’t recovered or the estimated tax-base isn’t as huge as earlier estimates and therefore the state couldn’t perform or have fresh funds to pay for the reoccurring expenses. Peace.

Bank of Namibia: Response to Global Finance Central Bankers’ Report (17.01.2022)

Opinion: Museveni and the NRM is in a ill-advised debt-cycle

The National Resistance Movement and President Yoweri Kaguta Museveni have created a negative spiral of debt. The state have taken out more and more debt over the years. The CSBAG, Uganda Debt Network and other organizations have spoken out about this. As the state have the need to pay more in interests and it takes away more from the general budget.

Now the state is saying it has 65 Trillion Shillings in unsustainable debt. That is happening after the Parliament have had sessions over the last few years. Where the only thing they do is to vote over debt and approve more loans to the state for various of development projects, roads and you can wonder if it does anything.

The state is now owning a lot of money. More money than it usually uses in a state budget. The state budgets of late have had half of the revenue coming from domestic taxes and the other either grants or loans. There is also additional supplementary budgets, which is coming in cycles during the budget year. Which is adding more debt… and creating more debt.

There been worry about the rise of debt, but the NRM and the President has said it has been done within reason. However, that is now the chickens coming home to roost. There is enough problems ahead and the state has created this financial conundrum. It has been done deliberately over time.

The Parliament is on the regular issuing now loans… and taking new loans. While hoping one day they have the revenue to actually do these things. The state is spending money and funds it doesn’t have. That is an unforgiving task… and the NRM cannot run away from this.

The NRM have created problem. The appointments of the President is doing this. The Bank of Uganda (BoU) and Ministry of Finance, Planning and Economic Development (MoFPED) should have seen this coming. They have been looking over the expenditures and the interests rates. They know when the grace periods of the loans are over. These folks are the ones who has the oversight and supposed sound judgement to advice the Parliament to accept all these loans. However, that is clearly not the case.

The state is crippling its budgets, overspending and over-loaning funds over time. Now, the creditors and debtors wants their pieces of coins back. They cannot bail on it or default on it. Then the state will not be trustworthy and be credible as a economic broker. The state is clearly struggling and lacking funds. That’s because they are having trouble to raise domestic revenue and have to high costs.

This is a self-inflicted ill-advised debt-cycle. A government not listening to CSBAG, Uganda Debt Network and others. The NRM and Museveni should have done that. It will be harder for them to get solidarity this time around. As the Museveni era of now is destructive. The state actions against its own citizens and totalitarian acts. Is not the ones who makes outsiders forgiving like it did in the early 1990s when Museveni was part of a new group of leaders that the West had hopes in. However, that boat has sailed and the truth has come out. That is why Museveni is still there and depleting the state like there is no tomorrow. This is why the debt is rising and its run without any balance of the budgets. That is why the debt is rising and there is no way out.

They want debt forgiveness. However, getting that now will be a feat, but not sustainable either. As this state will just take out new loans and not re-coup or try to absorb the lack of revenue, which is causing the problem in the first place. That is why the state doesn’t have any liquidity or equity to trade for the lack of revenue. It is just a sinking boat and the captain seems clueless…

Deficit financing can only take that far and now its at the end of that journey. Peace.

Ethiopia: The Global Society of Tigray Scholars and Professionals (GSTS) letter to the World Bank, International Monetary Fund (IMF) and African Development Bank Group (AfDB) – (14.04.2021)


Sudan: Council of Ministers – Press Statement (26.03.2021)

South Sudan: National Revenue Authority (NRA) – Re: Suspension of Withholding Tax on Pension Fund/Social Insurance Fund (02.03.2021)

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