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Archive for the category “Economic Measures”

RSA: Eskom – Stage 2 rotational loadshedding moves up to Stage 4 from 14:00 today (06.12.2019)

Deficit Financing: MoFPED propose to borrow 2 trillion shillings to cover the budget shortfall!

Deficit financing, however, may also result from government inefficiency, reflecting widespread tax evasion or wasteful spending rather than the operation of a planned countercyclical policy. Where capital markets are undeveloped, deficit financing may place the government in debt to foreign creditors. In addition, in many less-developed countries, budget surpluses may be desirable in themselves as a way of encouraging private saving” (Encyclopaedia Britannica – ‘Deficit financing’ (25.08.2015).

In the original budget for 2019/20, the estimated domestic revenue of the state was about Shs. 20 trillion shillings, while the rest would be covered by close to Shs 10 trillion shillings in this manner the budget would cover the 40 trillion shillings. Today in Parliament, the debt trap, which was forecasted by several of Civil Society Organizations and others was proven.

Not only with the recent stipulation of the first Supplementary Schedule to the Budget Year of 2019/20, but also the lack of domestic revenue. This again proves the trouble with generating even half of the budget. As the Parliament are this week, either accepting borrowing 2 trillions domestically to boost the lack of domestic revenue. That means the Uganda Revenue Authority (URA) and the state haven’t delivered on the promise. As the state was spending more and more, but not having the funds to do so.

Therefore, if the state does this. Than, Shs. 2 trillions are loaned to cover for the lack of delivery, the lack of preparations from the government and the added costs of the local government units created. The government knows this, but acts surprised that state have to invest in it. That’s why they have a supplementary budget for it and surely there will be more schedules before the end of the financial year.

Just look at this:

To address the projected revenue shortfall presented in paragraph 3 and the additional expenditure pressures presented under paragraph 9, Government requires a total amount of Euro 600 million equivalent to UGX 2,439 bn (Two Thousand Four hundred and Thirty-nine Billion) to finance part of the budget deficit” (Ministry of Finance, Planning and Economic Development (MoFPED) – ‘THE PROPOSAL TO BORROW UP TO EURO 300 MILLION (EURO THREE HUNDRED MILLION) FROM STANBIC BANK (U) LTD AND EURO 3OO MILLION (EURO THREE HUNDRED MILLION) FROM TRADE DEVELOPMENT BANK TO FINANCE THE BUDGET DEFICIT FOR FY 2019/20, December 2019).

Given the revenue performance in the first two quarters of the FY 2019/20, the projected revenue turnout for FY 2019/20 is Shs 181575.18 billion, against the target of Shs 20,448.73 billion. This

reflects a projected shortfall of Shs 1,873.55 billion” (MoFPED, 2019).

In line with the above Section of the PFMA 2015, Ushs 437.631 billion representing 1.08% of the Approved Budget for FY 2019/20 has been authorized by the Minister of Finance, Planning and Economic Development as Supplementary funding. The purpose of this letter therefore, is to submit Supplementary Schedule 1 FY 2019/20 for consideration by Parliament. Please make arrangements for the Minister of Finance, Planning and Economic Development to lay the schedule before Parliament” (Keith Muhakanizi – ‘SUPPLEMENTARY SCHEDULE 1 FY 20I9/20’, 21.09.2019).

Rt. Hon. Speaker, in line with Section 25 (1) of the Public Finance Management Act, 2015 (as amended), I authorized and have accordingly submitted to Parliament Supplementary Schedule 1 amounting to Ushs. 437.6 billion for this FY” (MoFPED, 2019).

In line with the above, the budget for FY 20Lgl20 is facing the following constraints:

– URA shortfall in revenue of Shs 1,873.55 billion;

– Additional expenditure pressures of Shs. L,432.2bn

– Non-receipt of World Bank budget support funds of Shs. 375 bn

and

– Non-receipt of capital gains tax of Shs. 225 billion (USD 60

million);

10. The total revenue resource shortfall in the FY 2019/20 therefore amounts to Shs. 2,473.55 billion” (MoFPED, 2019).

We know this is serious, when the budget of the FY 2019/20 was 40 trillion. When 2,4 trillion of these have to get borrowed domestically. Even if 437bn of these are supplementary budget and wasn’t in the original budget of the FY. Still, the 2 trillion are a big slice to borrow and gain more loans. This is a debt trap, trapped by even more trap. As the tax-base isn’t growing as forecasted or as possible. By this estimation of the original budget, the domestic borrowing in this financial year would go up from about shs. 10 trillion shillings to about shs. 12 trillion shillings.

Because, with to much taxation, the funds are taken out of the circulation and isn’t spread as much. Not having the ability to generate more earnings for the citizens. They cannot spend, because they are actually paying taxes. That’s why you need sustainable taxes, which makes sense.

That’s why these loans are coming, because the state defaults on taxes, lacks the tax-base and doesn’t have the opportunity to gain the needed revenue. This the reality of the state. They will ask for the loans and add more debt. However, the government will not take responsibility for the acts done. The state are deficit financing and not generating revenue. That is why they are loaning even more debt. At a rate, which should worry anyone following it. Peace.

Opinion: Uhuru, wananchi are broke because of you…

“The President wondered where all the money being used to construct government projects is going. In fact, he specifically asked us the question: Why are people broke; why is it that there is no money in their pockets?” the official reported to be a parastatal head was quoted by the publication” (John Wanjohi – ‘I Don’t Understand Why Kenyans are Broke, Uhuru Says’ 12.11.2019, Mwakilishi.com).

President Uhuru Kenyatta must think people are gullible and ignorant to the facts. That they are not understanding the bigger picture nor the consequences of the actions made by the central government. Because, going around asking this sort of question, opens the door to wonder, how stupid does the President think the wananchi is?

President Kenyatta, first and foremost. It is your reign and your decisions that has made people out of pocket and broke. It is your government policies, your actions as head of state and the reactions to that. Which in the end, accumulate to the result of unemployment, poverty and the lack of cash to go-around. That is all because of you and your yes-men.

People have tried to blame Henry Rotich for this, but lets be clear. His the scapegoat. The Cabinet Secretary or the Minister, which is easy to aim at, but he has just sanctioned and followed protocol made by the President and his patronage. There is nothing else too it.

That is why with the growing corruption in the reign of Kenyatta, the added debt and the new cap or celling for debt. Just shows what it is all about. The free money of loans to shield the over spending government, which builds pipedreams and white elephants like there is no tomorrow. While wondering why people doesn’t earn coins on it. That is because, they don’t get the tender through shady companies like with the NYS Fund, neither do they get any direct benefit of the SGR. Secondly, non see the money for the maize scandals nor the sugar cartels too.

That’s why its like this, just like the crack-down betting firms, where the state banned one and opened up the gates for another one. There is no development, only more shady tricks. Just like the trade of milk and the standards put on that, which is ironic. Since the President himself is involved and owner of that. Plus all the estates, hotels and whatnot, both the President and the DP now owns. They have created empires while being in office, also ensuring the cronies get a cut too. While the state suffers a bondage and will have for generations, because this one borrowed fiscal stimuli like their was no tomorrow to begin with.

So, its better for Uhuru to not act a fool, but to actually do his job. He has been globetrotting and a vagabond as the President. Maybe time to cool down, not do PR stunts and empty pledges of the Big Four and the Building Bridges Initiative, but actually deliver something that matters. Not just empty expensive containers, which someone inside the Ministry of Health could profit from. Since, that is how the Jubilee government have operated on a large scale, with Grand Corruption in their veins and borrowing money at large too. Therefore, the lack of fiscal responsibility, nor any substance of development for the poor.

That’s why Kenyatta, that’s why you have not succeeded. You have reigned supreme since 2013, but your not leaving anything positive behind for 2021. Only more loans, bigger corruption scandals and a questionable legitimacy, as you rigged the last election and used Cambridge Analytica to massage your message to the masses. Which will not be forgotten. Peace.

EFF welcomes Benin’s Decision to Withdraw its Foreign Currency Reserves from France and Calls on all other African Countries to do the same (09.11.2019)

Reserve Bank of Zimbabwe: Public Notice on issue and circulation of Two Dollar Bond Coin (04.11.2019)

Reserve Bank of Zimbabwe: Press Statement on the Deliberations of the Monetary Police Committee (MPC) – (29.10.2019)

Brexit: Lib-Dem leader Jo Swinson MP letter to Labour leader Jeremy Corbyn (24.10.2019)

Zimbabwe: An Anti-Sanctions march intro oblivion…

“Whether something will come out it or not, our voice as SADC will be heard” – President Emmerson Mnangagwa

The Zimbabwe African National Union – Patriotic Front (ZANU-PF) Anti-Sanctions marches are scheduled for the 25th October 2019. What has been stunning in the process is how organizers and ministers has entangled a web of weird acts. This has all been deliberate to get stunning numbers of people on the streets to march on behalf of the needs of private individuals, whose happen to be sanctioned by United States government.

However, they have targeted students and people who are studying for their exams O’ and A’ Level of Public Examination. That is happening on the 25th October 2019, the day that has proclaimed a public holiday. Meaning, that the rest of the public civil servants and others are free to attend, but these has to be left behind together with the lectures and teachers whose in-charge of holding the exams that day.

While the government has already asked all kinds of civil servants to attend and asked for their participation. They are all expected to go to the streets and defend cause. Not by will, but by orders and patriotic loyalty to the government.

We know the state are doing whatever they can do to get people to attend. There are even free trains to Harare on that day so people from Mutare and Bulawayo can attend it. The ZUPCO buses will also ferry people to the marches and not take their usual fee. Because, the state has to make perks for people to attend this.

To top it off, the government has asked farmers to donate fuel for the marches too. There is nothing in their way to exercise this march. Every avenue and part of the state is involved. To make it as big as possible. However, what the Youth League says about is damning and shows the true intent of the matter.

The ZANU-PF Youth League statement on the 21st October 2019:

“Addressing a media briefing, Cde Pupurai, said we are exposing our hypocrisy as a party, MDC demonstrations were barred citing that the environment is not conducive to hold demos, why are we doing it now? We are wasting millions of dollars on useless March instead of channelling those resources to providing clean water to the citizens. However the ZANU PF youth will stand for what is right for our country and our children. The revolution and our victory will be defended and no one will be allowed to tamper with it,” said Cde Togarepi. Cde Pupurai said while the constitution allowed peaceful protests, it also granted citizens the right to defend themselves against corrupt elements who have brought our beautiful country to its knees. Cde Pupurai said the March is nothing, but gimmick to cover up their corrupt tendencies. He said ZANU PF party had been hijacked by selfish individuals who want to die and leave our country destroyed” (ZANU-PF Youth League, 21.10.2019).

We cannot expect brilliance from the ZANU-PF, but there is some dim hope, as the Youth League at least has some sense in this manner. But don’t expect the President nor his associates to care about that. They are eating and plenty of it. They need a show to show force and strength, that they cause is golden. Just as the MDC are banned from showing up and demonstrate against it. Peace.

Brexit: A Shoddy Impact Assessment of the new Withdrawal Agreement Bill…

This was really inspired and not well thought out of, the Department of Exiting the European Union and the rest of the Tories. Really didn’t care much for the estimates of the costs, nor the consequences in concerns of their amended Bill to Parliament. Prime Minister Boris Johnson wants to just pursuit the ending without doing the proper work. This is shoddy, disrespectful work, which he wanted to be over within 3 days or so. Within the parameter of when he wanted to suspend the Parliament.

So, his acts and his vision is blurry, as the whole law and amendments of it. Is substantial and needs time to be addressed properly, that is if, the Brexit process and withdrawal of membership has consequences. Which it does, but apparently it is more important to leave, than to know why your leaving.

I have today looked through the Impact Assessment Report on the bill, which in itself is a sad report. A disgraceful attempt of justification and proving the possible outcomes of the withdrawal. Apparently, that didn’t matter, because my quotes are very striking. Take a look!

There could be costs to business associated with the arrangements in the Northern Ireland/Ireland Protocol. But these are inherently uncertain in their nature and intensity, as such, these costs have not been quantified” (Impact Assessment, 2019).

Customs:

Businesses in Great Britain and Northern Ireland may face familiarisation costs in adapting to the new customs processes, such as the requirements for customs declarations, in particular if they have not undertaken such processes before” (Impact Assessment, 2019).

This isn’t rocket science and will cost both the state and the businesses. It will cost both time and money, to fill forms and secure the movement accordingly to the regulations on both sides of the customs.

VAT:

Northern Ireland will be required to align with certain EU VAT and excise rules. VAT collected in Northern Ireland will be retained by the UK. Specific practical arrangements will be the subject of discussions within the Joint Committee, and it is not therefore possible to assess costs or benefits at this stage” (Impact Assessment, 2019).

The taxation on goods will be an issue and how its issued. This will add prices possibly on the consumer and also on the businesses. But the HM Government don’t know to what extent and how to operate. That is clearly a smooth transition.

Tariffs:

No tariffs will be paid on goods moving from Great Britain to Northern Ireland unless they are deemed to be at risk of entering the EU. The appropriate UK tariff will be paid on goods moving from outside the UK or EU to Northern Ireland unless they are deemed to be at risk of entering the EU. The Joint Committee will agree the criteria to be used in determining whether goods are not considered to be at risk of entering the EU” (Impact Assessment, 2019).

So, there will certain cost of moving goods into the EU as per the tariffs stipulated by the Joint Committee. This means, the UK-EU on accord will find the fitted prices on movement of goods form the UK into EU. That means, the goods moving across the borders will cost more, than today, as there is no-tariff on lots of products crossing the borders at this very moment.

Agri-Foods from GB to NI:

Agri-food goods moving from Great Britain into Northern Ireland would need to be notified to the relevant authorities before entering Northern Ireland and would be subject to checks including identity, documentary and physical checks by UK authorities as required by the relevant EU rules. These processes would introduce additional costs, both from one-offfamiliarisation and ongoing compliance, to businesses compared to current arrangements” (Impact Assessment, 2019).

This will surely cost and make it more time consuming. Not making it easy or smooth either. Surely, all of this is hardening the trade of this to NI.

Manufactured goods from GB to NI:

To ensure regulatory compliance, businesses in Great Britain selling to Northern Ireland may incur additional costs from product testing and corresponding administrative processes. The nature of the costs will depend on the product-specific requirements in EU law and on a business’s current approach to meeting these requirements. These costs may be passed through to businesses in Northern Ireland” (Impact Assessment, 2019).

Here the costs will be put on the consumer in Northern Ireland for the goods coming from Great Britain. The manufactured goods will not be cheaper, but more time consuming to get and has to follow other protocols, than the ones coming from Ireland/EU. This means for the NI it will be more profitable to get EU goods, than GB goods, because of the cost. That is simple calculation.

We can all see, that the Withdrawal Agreement and new legal text makes business, movement of goods and borders to the Northern Ireland more harder. That without swimming into the legal text nor the statutes of the Withdrawal Agreement. Because, this is just the mere chip-shape of the impact assessment of it all.

The whole thing is lazy and that makes me grim. Because, this shows the people releasing it. Didn’t do their job and show the real estimates nor the possible costs of doing business. Only that it might cost more, which it most likely will do, because you have more things to do before doing business. Peace.

Reference:

European Union (Withdrawal Agreement) Bill – Impact Assessment, 21.10.2019

Brexit: Chancellor Sajid David letter to Cathrine McKinnell MP – EU Exit Economic Analysis (21.10.2019)

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