Bank of Uganda’s Fresh report spells fear of the growing levels of debt!

This isn’t breaking news, this just facts at this point. The growth of debt is becoming a danger for the economy in Uganda. Because of the overspending and lack of donors to pledge for the needed government services, the bloated amounts of local government and the rampant cronyism. Is all combined making sure the extent of the economy gets hit, while the Uganda Revenue Authority, doesn’t have enough levies or enough taxes to gain enough for the shortfall of cash. The deficit is founded on loans, while the government are still paying interests and growing the debt ratio at a scale that is not healthy for the economy. Even if there is a future possible oil-revenue, it still has to become massive, to repay the debts of yesterday. When the amount of GDP goes to repaying and higher rates on the new loans. This is how to step-by-step killing the economy, by circling and re-issuing new debt, to pay off the old debt. Sooner or later, you need a scheme to fix it and start a Ponzi scheme to fix the economy. That is why there are ghost refugees and ghost projects to fix funding for the failing state.

Just take a look:

The provisional total public debt stock (at nominal value) as at end December 2017 stood at Shs. 37.9 trillion, representing an increase of 9.4 per cent relative to June 2017. This growth in the stock of public debt was mainly on account of a 12.2 per cent growth in public external debt (in Shillings terms), which continues to have the dominant share of 66.3 per cent of total public debt. In December 2017, external and domestic debt amounted to Shs. 25.1 trillion and Shs. 12.8 trillion, respectively, which is an increase of 12.2 per cent and 4.2 per cent, respectively, compared to June 2017.

The provisional stock of public external debt disbursed and outstanding stood at USD 6,902.7 million as at end December 2017, representing an increase of 10.8 per cent from June 2017 compared to an increase of 24.6 per cent in the corresponding period a year ago. The total external debt exposure (debt disbursed and outstanding and debt committed but undisbursed) amounted to USD 11,690.6 million as at end December 2017” (BoU, P: 16, 2018).

The present value of total public debt as a ratio of GDP stood at 28.1 per cent as at the end of December 2017, which is lower than the PDMF benchmark of 50 per cent. However, including committed but undisbursed loans, the ratio of total public debt to GDP is closer to the threshold. This poses a risk of higher exposure or failure to meet external debt obligations in case of exchange rate volatility and slow growth in exports. In addition, high debt may become a drag on economic growth by discouraging public investment due to the high debt service costs” (BoU, P: 17, 2018).

This sort of report should worry anyone who cares about the future, the growing debt is a bad sign. It is a sign that the National Resistance Movement and President Yoweri Kaguta Museveni, is putting the future at risk, because he wants to eat right now. Instead of balancing the budgets or trying to find ways to get fresh revenue for the shortfalls and deficits, instead he is borrowing for everything and with the lack of transparency, the funds are embezzled and gone in the wind. Therefore, the state can often borrow for something that only exists on paper. Which is even worse, because they are not delivering anything else than growing debt like it is a gifts. That they will not pay interests and pay it off sooner or later.

The amount of loans should worry, it really should. This sort of reports should shatter the Parliament, should reshape the government and should make the Finance Minister Matia Kasaija and Treasury Secretary Keith Muhakanizi, wish their were on a peaceful island drinking umbrella-drinks, while far away living on their pensions, and hope they are not getting a Q&A at the Plenary Session. Since this is damning and beginning of troubles ahead. Just not knowing how damaging it can be. Peace.

Reference:

Bank of Uganda (BoU) – State of Economy – March 2018

Uganda Communications Commission – Public Notice on Scratch Cards (24.03.2018)

South Sudan: National Communication Authority – “Public Notice – Suspension of vivacell Operations” (20.03.2018)

Brexit: PM Theresa May letter to EU President Donald Tusk (19.03.2018)

Brexit: Open Britain MPs letter to PM Theresa May on the Irish Border Question (16.03.2018)

Opinion: I thought South Sudan would be broke much sooner!

It isn’t strange that the Republic of South Sudan has run out of money before? That this was only about time before this could happen. Before all the Reserves of South Sudanese Pound had left the Central Bank in Juba. Why is that natural? Maybe because of the constant civil war, the famine that is arising, the lack of produce and the lack of institutions. It is all effecting the economy, while the NGOs and Multi-Nationals are doing what they can to cover the basics, while the state is using the taxed funds and earnings of the crude-oil to secure ammunition and weapons from shady sources. This is happening while the United States has issued sanctions and President Yoweri Kaguta Museveni of Uganda has promised weapons. Therefore the recent reports kinda fit a narrative, where the reasons for the bankrupt state is very evident. But I will come into that after the reports are mentioned.

First the RSS broke:

President Kiir says the value of the pound also keeps on deteriorating and these facts have made South Sudan a “laughing stock” in the world. He said the leaders of the country have to think of ways to increase production so as to retain the currency’s value. “That [attempted] forceful taking of power has brought us now to this stage where we have no money in our bank, we have nothing and so we have become a laughing stock worldwide,” he said during the swearing-in ceremony of the new Minister of Finance, Salvatore Garang Mabiordit” (Eye Radio – ‘Gov’t is broke – Kiir’ 14.03.2018).

Secondly The Sentry reported: “One key document, part of a collection of material provided to The Sentry by an anonymous source, appears to be an internal log kept by South Sudan’s Ministry of Petroleum and Mining detailing security-related payments made by Nilepet. The document titled, “Security Expenses Summary from Nilepet as from March 2014 to Date” (“the Summary”) lists a total of 84 transactions spanning a 15-month period beginning in March 2014 and ending in June 2015. In total, the document lists over $80 million in payments to politicians, military officials, government agencies, and private companies, many of which include captions that describe activities directly linked to the government’s war effort. Other documents reviewed by The Sentry include copies of correspondence that describe the petroleum ministry’s provision of fuel and other supplies to Padang Dinka militia groups” (The Sentry – ‘Fueling Atrocities – Oil and War in South Sudan’ March 2018).

And the Radio Tamazuj reported: “South Sudan’s government has awarded a major contract worth over $130 million to a private company to support military logistics operations, according to a document seen by Radio Tamazuj. The document bearing the signature of the country’s first vice president, Taban Deng Gai, said Tonga Investments Ltd has been given firm offers from the ministry of defense to supply food stuffs, assorted army uniforms, boots, vehicles and fuel to the army worth $134,703, 606.7. The document dated 7 March indicated that the Tonga Investments Ltd had identified Cyproil Trading Ltd based in Uganda as one of the willing and potential financiers with payments expected to be made by lifting of crude oil” (Radio Tamazuj – ‘Govt awards a major military supply contract worth over $130 million’ 12.03.2018).

So as seen there are clearly money to be spent, but they are not spent on salaries for teachers, for building roads, not even keep the central administration. But it is either squandered away on high-ranking politicians, which is the cronies and part of the Transitional Government of National Unity (TGoNU) or the SPLM/A-IG and SPLM/A-IO – Deng fraction. Since the state is initially run by them and by the decrees of the President. The Parliament isn’t really functioning, therefore, the last word always falls of the President Salva Kiir Mayardit, who do whatever he please and uses whatever tactic he sees fit. If it is continuing issuing skirmishes or fixing deals with UPDF. Who knows how the army get all their gear, but clearly the SPLA has connections.

The government is able to spend the money on guns, ammo and other luxurious things. It is known that the South Sudanese elite owns posh homes in Nairobi. We can just guess where else they have homes and has stash funds from the looting of the state. Not like the state needs the funds to build stuff and take care of the state. There are dozens of Multi-National Organizations who are ready and who also pays taxes to be there. There are also smaller NGOs that offers support for the basic parts of government structure. So not like the TGoNU needs to consider that. They have it already, but built on donor funding and also run on donor funding. Therefore, very easy for the war-lords, the tribal chiefs and the cronies of Kiir to eat the cash of the state.

I am not surprised at all, I just thought it would happen quicker or by some other means. That it would be crack with arrangements of crude-oil pipeline and the rates paid to Khartoum. If not the Northern Corridor Project within the East African Community. Or even the start of paying the project funds for the new capital Ramciel. Even if the state even would pay some respects to the importance of New Site. But I doubt that.

While the insurgence, while the opposition have made alliances and actually made themselves deals within, as the SPLA/M-IG are trying to settle with SPLA/M-IO and the South Sudan Opposition Alliance (SSOA) comes into effect. As the High-Level Revitalization Forum of the Intergovernmental Authority (IGAD) hasn’t bear any fruits. Since the ARCISS is officially dead, even if the International Community is trying to bring it back from its grave. While the War-lords continue.

The path already taken is clearly not the way of it, the elites around Kiir is eating. The men and clan’s men around having a field day, emptying the state, while the international community footing the bills for the rest. He is able to get guns, get equipment and get ammunition to continue this civil-war. At this point, he will not give in, unless he has secured power. He has fought for so long, that he will not give-way to anyone. The same with Dr. Riek Machar. He will neither step-down and give way. The people leaving SPLA/M-IO to different groups within SSOA should be sign enough too.

While the state is openly an open bazaar for Kiir to eat. Nothing is left untouched and not taken. If there is a cookie, if there is a piece of sugar and even just feeling of breadcrumbs. It going to be taken. Nothing is left behind. Because every penny is needed in the battle for supremacy. I am just waiting for the day he calls President Museveni and he sends a brigade or two. If the oil-money and funds will be sent his way. Peace.

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