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Archive for the category “Economic Measures”

New details in the UN Experts Report: On the Illegal Gold Export from Butembo to Uganda!

This is now more than known, that the Gold Refinery in Entebbe is a source of gold from Democratic Republic of Congo. Where the illicit gold export persists. This is a problem, where the state are not able to catch and the wealthy traders in Butembo/Bukavu bribe the local government associates. This here is showing how the President of Uganda and his family is involved in the illegal trading of gold. As the African Gold Refinery, which the First Family is owning is involved in. They are not transparent and for the reason, that the state doesn’t want to take responsibility for this trade.

“Several sources associated with gold trade told the Group that wealthy traders in Butembo and Bukavu or buyers in transit countries and Dubai financed the smugglers, enabling them to buy gold and transport it to foreign markets. Two sources directly involved in such transactions with gold traders based in Butembo told the Group that traders with no affiliation with the gold trade lent money to their bosses. The latter used the money in order to buy gold in Butembo. Traders who lent money were paid back in cash, either in Kampala or in Dubai, by those who received gold. The Group believes that circumventing the banking system through gold-based financial transactions generates a lack of transparency and violates the recommendations of the Financial Action Task Force as reflected in Congolese legislation” (Final report of the Group of Experts on the Democratic Republic of the Congo, P: 35-36, 2019).

“Uganda declared gold exports of 12,000 kg, but the United Arab Emirates said that it had received 21,044 kg of gold from Uganda” (…) “The Group noted that, at the time of writing, the authorities of Uganda had failed to send the Group the report of their investigations into the activities of Kampala-based gold traders, as officials had promised. On 16 January 2019, the Group met with representatives of African Gold Refinery Ltd. (AGR) at AGR premises in Entebbe, Uganda, and discussed in particular the fact that AGR had yet to provide the names of its suppliers to the Group” (Final report of the Group of Experts on the Democratic Republic of the Congo, P: 36, 2019).

This is just verified reports from the United Nations Experts, whose investigated it. They have digging deeper. The Report is continuing to show how the state is benefiting of the illegal trade, as long as the Democratic Republic of Congo is missing it. They are being looted by illegal logging, trading, smuggling and not doing due diligence of the mineral resources produced there.

The Ugandan authorities doesn’t care that this is stolen and not verified, as the refinery is showing that they are not caring about the production or the proper protocol of the mineral production, as long as they are profiting from the illicit trade. This is the moral of the story, as the elites of Kampala are eating of the illegal trade. They are doing this and continuing to do so. Peace.

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Opinion: [Shootdown] Museveni’s new magic bullet to beat poverty!

Museveni made the remarks yesterday Sunday while delivering his speech during the 30th Heroes Day commemorations held at Kasanje War Memorial Grounds in Wakiso district. He noted that the new program is set to be unveiled during the national budget reading session on June 13. Museveni explained that although there are many several other poverty alleviation programs running across the country, the new program will finally offer the magic bullet to get out of poverty” (URN – ‘Gov’t to introduce another poverty alleviation program’ 10.06.2019).

In the Republic there been many schemes to stop the rampant poverty in Uganda. However, for some reason none of them is working. There sometimes so many going on at the same time, you could think it was a public enterprise to get foreign funding to allocate funds for the projects.

In 1995 the state Entandikwa Scheme launched it and by 2002. The state then introduced the Rural Micro Finance Project was launched instead in 2004. This was not the final one of these, even if the Micro Finances are still viable, but not the main stay.

In next step was the National Development Plan again lasted between 2010/11 – 2014/15 and the Poverty-Environment Initiative. This has been extended by the National Development Plan II (NDP II), which has a lasting period from 2015/16- 2019/2020 and still succeeding to this day.

However, as you would be thinking this is enough? Well, the same state has launched National Agricultural Advisory Services (NAADS) was launched as a scheme in 2002. The Youth Livelihood Programme was launched in 2013. Operation Wealth Creation was launched in 2013. All of these things was created for the same reason, to end poverty. Surely there are plenty more programmes, schemes and tricks of the trade to end poverty. Still, the government have not able to fix the issue.

The National Resistance Movement (NRM) have launched all of these and apparently the President haven’t delivered on this promise. That is why the President again launches a new trick of the trade. This here is just the new way they are trying to sell the end of poverty.

The NRM have tried this their way since the beginning of its reign. President Museveni have clearly tried and not succeeded.

This new scheme is surely just a way for his closest associates to eat. They just need to be revitalized and amended to fit the donors paradigm and the whatever they can reconfigure the budgets.

Museveni is shooting in the dark, his shooting fish in the barrel, he finally has the answer to the magic bullet that shoot JFK in Houston. Because, there is more likely finding the solution of that, than actually solving the issues around poverty. The second reason is that as long as the public and citizens stays poor. They will need aid and foreign donors. Therefore, the President will use all methods and schemes to beat it, but never get results.

That is why this newest scheme will end up like all the other ones. This President has found a new way to get funds, just another trick of his trade. That is what he does, Gen. Salim Selah will surely be involved in this one too. Just like he has done in the past. That is how this is ending. Don’t be shocked or surprised.

The President and NRM had 33 years to be able to do this. They have created all of these methods, but they are never working. That is why I don’t believe this one will do the cut either. Because there is no general will by the authorities to actually get rid of it. They want initially to keep people poor, to be able to get “free” money from the donors and not have to do their job as a government. Peace.

ANC: Statement of Officials of the African National Congress regarding urgent Economic Priorities facing South Africa (06.06.2019)

IMF: South Sudan is in a deep economic crisis!

The International Monetary Fund has today released their press release on the economic and financial crisis, which is there. The IMF is really stating the facts, the dire needs of the state and the need for reform. Transitional Government of National Unity (TGoNU) really has a lot of work to fix this. South Sudan needs peace to fix this and not more civil war. However, what the IMF is stating is really vital to fix the economy.

The Republic of South Sudan needs some serious revamp of the economy when the IMF state it like this. Clearly, the government has more than enough on its plate, but they surely has to focus to get this in order. That shows the pressure on the state to get it fixed.

Take a look!

South Sudan is in a deep economic crisis. Economic conditions have deteriorated rapidly since the beginning of the civil conflict in late 2013. Real GDP is estimated to have declined by 2.4 percent in 2017/18 adding to a cumulated decline of about 24 percent in the last three years. Overall, real disposable income (adjusted for terms of trade) is estimated to have declined by about 70 percent since independence in 2011, contributing to an increase in poverty headcount ratio from 50 percent in 2012 to about 82 percent in 2016” (…) “Fiscal policy has been weakened by the loss of fiscal discipline, deteriorating public financial management, and contracting of non-transparent oil advances, which have increased corruption vulnerabilities” (…) “The banking sector is yet to recover from the adverse effects of the civil conflict, high inflation and strong currency depreciation. Consequently, many domestic banks are heavily undercapitalized and face rising non-performing loans” (International Monetary Fund – ‘IMF Country Report No. 19/153 REPUBLIC OF SOUTH SUDAN 2019 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR THE REPUBLIC OF SOUTH SUDAN’ 04.06.2019).

We are seeing now what is at stake for the government in Juba to fix and ensure that they get to stabilize the economy, as well as finalizing the peace-agreements. So, that the public get enough peace to get the banking sector working, the financial markets running and possibly stop the economic crisis. Which has only been made worse by high inflation, strong currency depreciation and grand corruption. All of this has to get in order and get corporate governance, and financial statutes to safeguard the economy.

This will not happen over night, but the IMF is really warning in their press release and in their staff report. I just showed the gist of it. But it wasn’t positive.

To end with a few final statements from the Executive Board Assessment: “Directors observed, however, that the country is facing a deep economic and humanitarian crisis, and underscored the importance of decisively implementing key reforms to restore macroeconomic stability, strengthen economic buffers, improve governance, and rebuild credibility with the international community” (IMF, 04.06.2019). Peace.

EFF Statement on Negative Economic Growth under Ramaphosa Leadership (04.06.2019)

Hatua 254 Open letter to the World Bank: “Re: Citizens of Kenya Protest Letter on KSH 75 Billion Loan to the Government of Kenya” (03.06.2019)

 

Central Bank of Kenya: Launch the New Generation Banknotes (01.06.2019)

Uganda National Teachers’ Union: Clarification on Expected Salary Increment for Teachers in FY 2010/20 (28.05.2019)

Central Bank of Kenya: Press Release – Monetary Policy Committee Meeting (27.05.2019)

Deficit Financing: The art of fresh loans for the FY2019/20!

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).

Just as it is soon a new Financial Year and also another budget. This time its for the FY 2019/20, the last one before campaigning. Therefore, the added strain on the economy will come, as the state funds are used for campaigns for the ruling regime. This is a steady act of the National Resistance Movement (NRM) and President Yoweri Kaguta Museveni. We can expect more of it. That is the reason why the lack of fiscal responsibility is evident. As the state is within a year going from spending 32 trillion shilling into 40 trillion shillings. This without substantial rate or even more revenue to cover the added expenses. That means the state is more addicted to loans and grants.

Surely, the people should be aware, as the state has already gotten more loans and has to pay more in interests than before. With the new infrastructure loans and other development projects will hit the costs in future budgets. Even with Petro-Dollar, the state still has a lot of old debt to get revenue to cover. Especially, in the short-term window, as the grace periods of old loans will hit the budgets too. It seems like the state is only considering the debt-rate, but not the actual cost of the loans in itself.

That is why I will take one quote from the IMF, before showing what reports there was from Parliament, As they have voted for a new budget, which has escalating spending further without the revenue. That should be a worry. Take a look!

IMF May 2019:

Rising debt puts more strain on the budget as more resources need to be allocated for interest payments. One shilling paid for debt service is one shilling less going to a school or a health clinic. The current ratio of interest payments to revenue is comparable to what countries with high risk or in debt distress typically face” (IMF – ‘Uganda’s Economic Outlook in Six Charts’ 09.05.2019).

Rising debt:

The Committee noted that , the total public debt stock increased by 12.5 percent to USD 11.52 billion as at end December 2018 from USD 10.24 billion as at end December, 2Ol7 out of which domestic and external debt accounted for 33.5 percent (USD 3.86 billion) and 66.5 percent (USD 7.66 billion) respectively. The external debt stock increased by USD 0.78 billion to USD 7.66 billion by end December 2018 from USD 6.88 billion at end December 2017. The increase was mainly from China (25 percent) and World Bank (40 percent)” (REPORT OF THE BUDGET COMMITTEE ON THE ANNUAL BUDGET ESTIMATES FOR FY 2O19/20, P: 7, 2019).

Minority report on growing debt:

Worrying to note is the fact that huge portion of the budget resource is to be financed through borrowing. Out of the projected by domestic revenue of UGX 20.59 trillion (51%) while the budget of UGX 40.48 trillion, 9.44 trillion (48%) will be sourced from both domestic or external borrowing” (…) “It should be noted with concern that projected are almost debt expenditures in FY2019/20 equal to tax revenue (URA tax collection) of UGX 20.59 trillion” (A MINORITY REPORT ON ANNUAL BUDGET ESTIMATES TY 2019/20, P: 4-5, 2019).

It should be worrying how easily this budget was passed. How between last FY 2018/19 to FY 2019/20 the state could add 8 trillion shillings on the budgets. This without counting or even having the added revenue needed. This meaning the state has a giant deficit, which is about half of the budget. Where they have to get funding from outside sources, either by loans or grants. Lots will be loaned for and has to be paid for later with interests.

Certainly, this is a way of ensuring that for every shilling paid in loans, the state could have delivered state services to the public. That is even something the IMF was pointing out. This should be a worry for Ugandans, as the state is misusing the funds, loaning and borrowing on their future, without certainty of being able to repay these loans. That is what is shocking as the oil revenue has been postponed again and the lack of progression on the matter. This means the state is not hitting its targets, while taking up more loans on future revenue. Anyone should be worried about this, because who knows tomorrow and what if the economy totally tanks before the industry takes off. They are clearly living large on Deficits Financing and hoping the golden goose soon lays eggs. Since, they are continuing to fund their operations and the state with loans.

Than, the oil will be sold wholesale, as the state cannot manage to gain revenue and has to trade off everything. The risks it is taking is reckless. The spending is bonkers. That the state is initially a year before an Election Year is creating this huge deficit. Isn’t a sign of strength, but of weakness. As well, as having a blind faith, hoping for a narrow escape in the realm of Deficit financing. Peace.

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