Let’s bring some data to the International Monetary Funds (IMF) statement on its consultation with the Republic of Zimbabwe. What its stating is dire. As the situation has been escalating, even if the state has made imaginary tale of where they will fix it and get the inflation in balance. However, there is no proof it.
Finance Minister Prof. Mthuli Ncube and Reserve Bank of Zimbabwe Governor J.P. Mangudya after this consultation must scratch their heads. Because, they will not know how to make statements and propaganda countering this.
Just like they cannot explain this rates of inflations:
|April 2019||75,86 %|
|May 2019||97,85 %|
|June 2019||175,66 %|
|July 2019||230,54 %|
|August 2019||288,5 %|
We can see the idea and the feeling of the annual inflation, just as the IMF states this today:
““Economic difficulties have continued throughout 2019, exacerbated by severe weather shocks. GDP growth in 2019 is expected to be steeply negative as the effects of drought on agricultural production and electricity generation, impact of cyclone Idai, and the significant fiscal consolidation to correct past excesses serve to drag on growth. Social conditions have deteriorated sharply, with more than half of Zimbabwe’s population (8.5 million people) estimated by the UN to be food insecure in 2019/2020. Weakening confidence, policy uncertainty, a continuation of FX market distortions, and a recent expansionary monetary stance has increased pressure on the exchange rate. Since the February currency reform, the exchange rate has depreciated from USD 1:1 ZWL to USD 1:16.5 ZWL (as of September 23), fostering high inflation, which reached almost 300 percent (year-over-year) in August” (IMF, 27.09.2019).
This is not shocking news, but something that has been seen on the horizon for so long. Even if the Zimbabwe African National Union – Patriotic Front (ZANU-PF) and its closest associates are blaming sanctions, the IMF isn’t seeing that, but instead looking at their own activities. Just like today, looking back just a few days ago, RBZ had their view on this.
Even as the state said this just 14 days ago:
“The country is moving towards bringing inflation under control and lowering it over time after the initial burst of high inflation that followed from the liberalisation of the exchange rate” (Reserve Bank of Zimbabwe – ‘2019 MID TERM MONETARY POLICY STATEMENT’ 13.09.2019).
Either Governor Mangudya was deliberately lying to the public or his deliberately stupid. Secondly, he might even be very naive and hoping the public is endearing as elves in Disney movies. Because, the changes between today and 14 days ago. Cannot be that big of shift, as well, as there are no direct or correcting policy to really make a difference to the hyper-inflation in the Republic.
The Finance Minister Ncube is working in tandem with Mangudya and they know this. The world knows this and that’s why the IMF is downplaying the actions made by these fellow gentlemen:
“Policy actions are urgently needed to tackle the root causes of economic instability and enable private-sector led growth. The key challenge is to contain fiscal spending consistent with non-inflationary financing and tighten monetary policy to stabilize the exchange rate and start rebuilding confidence in the national currency. Risks to budget execution are high as demands for further public sector wage increases, quasi-fiscal activities of the RBZ that will need to be absorbed by the central government, and pressure to finance agriculture could push the deficit back into an unsustainable stance. There is also a need to strengthen FX market operations and improve transparency on monetary statistics. These adjustment challenges are magnified by slow progress on international reengagement. Efforts will need to be intensified on both economic and political fronts to drive Zimbabwe forward” (IMF, 27.09.2019).
Surely, that is an assault on the actions made by the RBZ and Ministry of Finance, whose have acted wrongly and not done what the IMF see fit to fix the issues. Clearly, what the government need to do is generate trust and also look into the pin-pointed objectives, than they might have a shot of fixing this. But that is if they swallow some pride, and continue on their path. Which is reviving the hyper-inflation of 2008 and destroying the economy. Something that are close at doing and in-capacitate everyone working in the republic, making their wages worthless. Peace.
The act of Finance Act No 2. was gazetted today on the 21st August 2019. What is weird to be is the two following codes or sections, this being the 22 and 23, which is countering each other. I am finding this as financial voodoo with the currencies. As this act is initially making the RTGS Dollar and Zimbabwe Dollars equal. Combined with the enacted value of the RTGS Dollar, the same as the US Dollar. Which by all accounts are impossible, as the exchange rate isn’t that static, neither followed by law. Unless, the state plans to infuse cash-flow and beat the rates between the RTGS Dollar and the US Dollar.
Alas, the madness, continues with the legislation gazetted today. I will show the two parts of the legislation, before addressing it a bit more. Under the sections itself.
“22 Issuance and legal tender of RTGS dollars, savings, transitional matters and validation (1)Subject to section 5, for the purposes of section 44C of the principal Act, the Minister shall be deemed to have prescribed the following with effect from the first effective date—
(a) that the Reserve Bank has, with effect from the first effective date, issued an electronic currency called the RTGS dollar; and
(b) that Real Time Gross Settlement system balances expressed in the United States dollar (other than those referred to in section 44C(2) of the principal Act), immediately before the first effective date, shall from the first effective date be deemed to be opening balances in RTGS dollars at par with the United States dollar; and
(c) that such currency shall be legal tender within Zimbabwe from the first effective date; and
(d) that, for accounting and other purposes (including the discharge of financial or contractual obligations), all assets and liabilities that were, immediately before the first effective date, valued and expressed in United States dollars (other than assets and liabilities referred to in section 44C(2) of the principal Act) shall on the first effective date be deemed to be values in RTGS dollars at a rate of one-to-one to the United States dollar” (Finance (No. 2) ACT, 2019).
“23 Zimbabwe dollar to be the sole currency for legal tender purposes from second effective date
(1) For the avoidance of doubt, but subject to subsection (4), it is declared that with effect from the second effective date, the British pound, United States dollar, South African rand, Botswana pula and any other foreign currency whatsoever are no longer legal tender alongside the Zimbabwe dollar in any transactions in Zimbabwe.
(2) Accordingly, the Zimbabwe dollar shall, with effect from the second effective date, but subject to subsection (4), be the sole legal tender in Zimbabwe in all transactions.
(3) For the avoidance of doubt it is declared that, from the second effective date—
(a) references to the Zimbabwe dollar are coterminous with references to the following and to no other forms of legal tender or currency— (i) the bond notes and coins referred to in section 44B of the principal Act; and (ii) the electronic currency prescribed for the purposes of section 44C of the principal Act, that is to say to the RTGS dollar;
(b) the above mentioned bond notes and RTGS dollars are at par with the Zimbabwe dollar on and after the second effective date, that is to say each bond note unit and each RTGS dollar is equivalent to a Zimbabwe dollar, and each hundredth part of a bond note unit and each hundredth part of a RTGS dollar is equivalent to a Zimbabwean cent” (Finance (No. 2) ACT, 2019).
Because, this is the continuation of the hectic balances and switching of currencies. That they are declaring foreign currencies as illegal tenders in Zimbabwe. Is to be expected, as they are getting a new currency or revamping a dead one. Still, the ZANU-PF should have ensured it better.
As they have had temporary measures like Bond-Notes and RTGS Dollars, which they are still infusing into the Zimbabwe Dollars, as a measure, where the ones who paid more than one-to-one with USD. Will lose funds and within that system, the state will initially shave-off funds from the public as they are transferring to RTGS Dollars or even Zim Dollars.
Combined with that shortfall in the public, as the inflation is still on the rise. The add-ons of financial distress will continue, as the state is still using half-measures to contain the economy, with the values and laws around the RTGS, instead of going all in with the Zimbabwe Dollars. They are in this and makes the mash-up between the RTGS/Bond-Notes and Zimbabwe Dollars. All of these three currencies are supposed to be equal and in tandem.
That will confuse and make it messy, as the electronic, the half-measured bond-notes and the revamped Zim Dollar are supposed to change the economy. This financial instrument is supposed to be the key to the troubles the economy is in.
I just don’t see it, I see it as a hectic abstract transaction system used to be able to fix and configure funds, by jumping between the three and taking more funds out of it while the public is losing on the various currencies. This is all made by the state and they are initially doing this to their own. Instead of thinking out one path to beat the hurdle, they are instead making it three. While, they still proclaiming Zim Dollar as the only one, but opening up to continue the two others.
Which is a sophisticated way of ensuring the state to get the Forex or exchange between them. As you have to exchange or pay in one form, the one set as the standard or the Zim Dollar, meaning, if you planning to move the RTGS Dollar to pay for something, that has to be transferred into Zim Dollar.
Financial voodoo and the public will suffer, because the state isn’t cleaning the slate, but trying to patch up wounds with yet another half-baked measure. Peace.
““In order to produce something you need four things; land which is a natural resource, labour which we have in plenty, capital money and entrepreneurship, the spectacles to see where the opportunity is and turn it into profit. You can’t have 68% of the homesteads (eating what they produce) and you think you’re an economist. You’re just a total failure. Infant mortality rate, how many children are dying when they are still young? Why are they dying? Because they have problems, mainly because of problems of having no money. What does it mean that 68% of the homesteads are outside the money economy? We have a few modern farmers who are part of the 32% and other entrepreneurs. Those will continue but let us wake up this 68%.” Museveni said” (URN – ‘68% of Ugandans are poor because of sleeping – Museveni’ 12.08.2019).
President Yoweri Kaguta Museveni have just ended his campaign and Wealth Creation Tour after a few months of steadily traveling across the Republic. In the final days of this he was a part of Investment Symposium 2019 in Arua.
What his saying isn’t new, he has used this message before, that the public is lazy, that they are not working hard enough. That they are not as hardworking and smart working like himself. Because, everyone should aim for being the photo-copy of the President. That is how you move ahead in the Republic.
That this is an insulting message from someone who had 33 years to make a difference. For someone who has had three decades to change the institutions, state owned enterprises and organisations run by state.
If the President really worked for this, strived to make the finances good and economy booming. He would have delivered that already. His party has reigned supreme, had the majority of Parliament, had a One-Party state for a decade as well. So, if someone should have the ability to get his vision through, it should have been him.
However, spoiler alert. His been working for himself and his wealth. Not the wealth of the public, his using the state as racket. That is why the state gets into debt, while himself and his family is running successful businesses. This is the mere reality, a reality he doesn’t touch. As well, as the open laisses faire approach, while only partial subsidizing whatever defunct enterprise that is in the wind.
President Museveni can put the blame on the public. If not he will blame the opposition, the lazy bureaucrats or anyone who doesn’t cut it. Because, that is something this man does. Right now he blames the majority of the public. However, he has had 33 years to wake them up and get into the economy. Still, its not like his succeeded or even tried, except with schemes that the Kitchen cabinet have earned funds from.
Therefore, maybe just maybe, Mr. President its your failure, its your lack of policy and will, which is the reason for the people sleepwalking to their inevitable death. You could have done something, but you didn’t, that’s the fact. Peace.
The Republic of Uganda’s economy is really reeling, it cannot be sustainable as the Government of Uganda is growing their debt like there is no tomorrow. While the fiscal growth is substantially lower than their rate of debt-service. As the growth of debt combined with lacking growth to substantiate the shortfall.
In addition, with the knowledge of added expenses, growing shortfall of funds in the upcoming Financial Year of 2019/20 and the election year of FY 2020/21. There will be more add-ons on the need for debt service, as the state already had loans outstanding, which the grace period ends and the debt-service begins on. Therefore, the amount of loans will transpire even more, than what is in this report. The endless cycle of debt and growth of it, is worrying, as well, as the state thinks that the magical wand of oil-money will clear this debt. Even as the first operational oil field and such has been postponed yet again.
“The total Government of Uganda external debt service by end of FY 2017/18 amounted to US$275.75 million, which was an increment of l29% compared to US$120.62 million in FY 2016/17” (…) “Debt service of Uganda’s external debt is on the rise and outstripping growth of the country’s income, currently at 6%. This poses risks for future debt repayments, especially as the country continues to acquire external debt at less concessional terms, especially to finance the oil development programme” (P: 6-7, 2019)
“It follows that as interest rates increase, the debt service obligations of Government also increases. The rise in external debt interest costs attests to the fact the government is increasingly contracting non-concessional debt, which will increase the repayment burden” (P: 24, 2019)
“However, this may not be the most likely scenario, as most projects have been discounted and some excluded in the macroeconomic framework. With the development of the NDP III, additional project and other pipeline project related to the oil developments and other infrastructure, will increase the financing requirement of government in the medium term. The inclusion of the above projects will re-classify Uganda from low risk of debt distress to moderate risk of debt distress or high risk if the export shocks materialize. A downgrade would have significant implications for the program with the IMF, where Uganda’s credit risk rating will worsen; implying that accessibility of nonconcessional financing will be limited. This will limit credit to Uganda to only concessional and grants financing.” (P: 28, 2019)
You don’t need to smart about it, as the state has bigger budgets with higher shortfall in the economy, combined with debt service and higher interest payments on the growing amount of loans. You know sooner or later, the economy will tank, as the fiscal responsibility is taken for granted and that fresh funds are lacking, because these are taken out of the economy to finance the payments of the old debts. Instead of generating growth and actually naturally grow the economy, by spending and investing as a state. The money is taken away to service debt, instead of building the state. That is what they are doing and at a alarming rate. Peace.
NEC1-19 – ‘REPORT OF THE COMMITTEE ON NATIONAL ECONOMY ON THE STATE OF INDEBTEDNESS, GRANTS AND GUARANTEES’ June 2019, Parliament of Uganda
There are no short supplies in ghosts, they been roaming this earth with us earthlings for so long. But in the recent times, they are becoming more ever presence. They are turning up on front-pages, having more rumours about them than the Kardashians and they are eating more then the living.
These ghosts are in every part of lives, every part of government and can suddenly empty all sorts of state reserves. This being tenders for passport paper, for registration of siblings and even death certificates, you got to pay-off some ghosts. That is just the way things are.
These ghosts are hooking themselves up with tenders for constructions of government subsidized infrastructure projects, they are getting tenders for service agreements for any ministry or department. The money for these ghosts ends up in the Cabinet Secretaries hands or in Honourable man leading the show. However, the public will never touch these funds or see the project. They were just something beautiful on paper and promising for the place it would be built. But, that was just a hoax and mirage spread to the public.
They are ever growing these things and sometimes they even get hooked-up with funds from international and bilateral organizations to fill in the gap of funding. This being done in the pretext of supposed needed basic government functions or adjustment of public investment. This being ghost schoolbooks, ghost medicine and ghost vaccines. There are nothing that suddenly will never appear. If this being procurement papers, lack of tenders or even the existence of the companies selling the products. It will all vanish in front of our eyes. Like they never appeared in the first place.
The government might even order ghost cars, ghost roads, ghost railroads, ghost schools, ghost hospitals, ghost seedlings and ghost salaries. There are nothing that cannot be ghosted, even the most life-saving parts of government work. That supposed to save life and secure the citizens can be used as a trick to steal funds. This is just the order of the day.
There are stories from everywhere, it is not even shocking. I am just awaiting ghost toilet-paper, ghost water and ghost liquor to hit the front-pages, because they have forge some other document and ensure they are eating on others people’s dime. That is just the way things are, we are seeing it and millions, upon millions are eating every day. They smile, they grin, they campaign and kiss babies, but when they are in office; they will figure out a way to eat off our plate. That is just the way it is.
It isn’t perfect. It is just a life of ghosting, embezzling, white-collar crime and grand corruption, which we are bit to used too. It isn’t funny, this isn’t Caspar the Friendly Ghost. Neither Ghostbusters 1 or 2 or 3. No, its just our civil servants combined with elected officials taking us for ride. Peace.