Opinion: Mr. President needs more supplementary funds than the average referral hospital

Today, the Ministry of Finance, Planning and Economic Development (MoFPED) in the first week of the budget year dropped the first supplementary budget of the budget year. What is striking in this one and the International Monetary Fund (IMF) is loaning billions upon billions of shillings for a possible financial recovery after the pandemic.

However, the President is now getting more funds in the Supplementary Budget than the 15 referral hospitals. Yes, the Ministry of Health getting a huge slice of the pie this time. Nevertheless, the fine print shows that the President needs 6,964,000,000 to fight COVID-19. He needs 6.9 billion shillings on his own to combat this.

The 15 referral hospitals, which has been deemed fit for additional funding on the other hand gets the handsome sum of 575,500,000 or 575 million shillings. In total 8,625,000,000 or 8,6 billion shillings. That’s the total direct budget supplement from the state to 15 hospitals in the middle of a pandemic and the second wave.

The funds given to the hospital barely have over 1,5 billions shillings more than the President. However, each hospital gets less funding and they are on the frontline. It is not like the President is giving people vaccine in Kawempe or in Makindye. Heck, he will not even do it in Ankole. The President is rather safe behind bulletproof glass in his vehicle, than ever giving a helping hand. Unless, there are some elders willing to bend their knees for him and kiss the ring for his majesty.

This is a supplementary budget to fight COVID-19 not to further salaries for additional Presidential Advisors or whatnot. Neither it is to cover expenses from the general election or what else you can imagine.

It is just baffling that the state prioritize this way. Just like the External Security Organization gets additional 1.1 billion shillings and Internal Security Organization gets 4.7 billion shillings. You can wonder how these organizations combat this deadly disease. In combination that the Ministry of Defence is getting the 10.4 billion shillings and the Uganda Police Force for some reason has the grand total of 19 billion shillings. This is all security, tear-gas and to enforce the Standard Operational Procedures SOPs or the Presidential Directives plus keeping the officers and soldiers happy during the lockdowns. Because, what does these entities has to offer in the combat of COVID-19?

That is beyond the point, right? Just like the Office of the President has little to nothing to do in the ambition to stop the spread. This just shows how mismanaged the whole thing is and lack of priority. When such vast sums of money can be spent on these parts of government. This is not to procure or get vaccines. This is not to buy PPE or produce more oxygen. This is not train more nurses or doctors. No, this is to boost the fragile ego of one man and secure his reign. Why else would he spend billions on the State House and Security, as a measure to fight COVID?

He is not kidding anyone, only himself and his fellow cadres who eats this nonsense for breakfast. This a mockery and public wastage at it finest. Peace.

Uganda: Statement by Finance Minister Matia Kasaija on IMF Executie Board Approval of extended Credit Facility for Uganda to Support Post-COVID-1 Recovery (30.06.2021)

The Art of Deficit Financing: Budget 2020/21

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).

What is striking from the 2020/21 budget is that its not only 45 trillion shillings, but the way they are financing this spending. Because, the budget need financing or revenue to pay the expenditure. You cannot use air to pay the bondsman. The people you owe money or supposed to spend on needs real cash-flow and liquidity to be fiscal responsible.

What we learned again is the debt deficit financing, which has been common staple in the Republic. Since domestic revenue or tax revenue is about 20 trillions shillings. This means that the rest of the budget has to paid for in various of other ways. In this regard, the state are borrowing, refinancing and gaining more debt. As the state is also wasting more of the budget on paying interests.

This is really making a evil circle and continuing debt trap. Even if the trillions upon trillions owned by the state is growing. That this still haven’t hit a debt ceiling. However, the issue here is the amount of paying interests. They are wasting away money on paying for old loans. This is what the state is initially offering. While it is gaining new debt to finance the over-expenditure today.

When the state pays 4 trillion shillings (9% of the budget) in interests. That shows how destructive this is for the budget. How important it has become. When 1 in 10 shillings of the budgets are paid in interest. This money could have been spent in all parts of society. It could have changed people’s lives and invested in the future. Instead its paying on the debt trap created by the same state.

Deficit financing and refinancing will only ensure the future generations are paying for the growing debt created by the current government. They are borrowing on the future growth and supposed revenue. Even as the state is ballooning the budgets, that they are not able to cover more than half. That is worrying and should worry the republic too.

Yes, that budgets get ballooned in election years are common. That the budgets are insincere and write of taxes in these years are typical too. All of this isn’t new. It is what happens when the Republic is preparing for elections in the coming year. Therefore, the state needs a treasure chest to bling out on chiefs, voter tourism and whatever else to look good for everyone.

That is why this budget is like this. We can clearly see that the state are continuing to acquire more debt, which means the interest payments will grow every year. This is why the refinancing and growing debt should worry everyone. Because, just like the interests payments are now at 9% or 4 trillion shillings this year. We can wonder how it will look when the grace-periods of several of loans are over and the initial price of these as well.

The Republic of Uganda deserves better, but the leaders and the ones in-charge are making it like this. They are not concerned about the future and that is very clear. As they are spending and squandering away the future today. Then someone have to pick up the tab in the future. Peace.

Uganda: Kasaija plans to borrow $190m extra to cover a budget shortfall within two years!

Someone please call 911, yeah yeah (pick up the phone yo)

Tell them I just got shot down, tell them I just got shot down

And it’s piercin’ through my soul (I’m losin blood yo)

Feel my body gettin’ cold, oh, so cold

Someone please call 911 (can you do that for me)” – Wyclef Jean ft Mary J. Blige – ‘911’ , April 2000

In an election year in the Republic, the economy usually runs loose. The State House lacks suddenly funds, the President needs more and so fourth. That is standard procedure. However, on the 19th March 2020 Matia Kasaija has now announced that the plans to borrow USD 190 million to cover a short-fall of funds, because of the COVID-19 or Coronavirus.

This is deemed fit because of the pandemic and the financial disruption it has. Not that the Republic is alone in this. Other big states and plenty in the Western hemisphere is putting up packages of economic stimulus to salvage the economy because of it. So, the sentiment is understandable. However, the Ugandan republic is already heavily indebted and every single development project of late is covered by debts and debt relief. Not like its sustainable to take up nearly USD 200 million to suddenly boost a dying economy.

Here’s the quotes:

The low activity in industry and services sectors will result into loss of jobs further leading to a decline in economic growth and an increase in the level of poverty. The number of people that could be pushed into poverty is estimated at approximately 780, 000” (STATEMENT ON THE ECONOMIC IMPACT OF COVID.19 ON UGANDA,, 19.03.2020).

To deal with the financing gap in the Government budgets for FY 2019/20 and FY 2020/21, my Ministry will seek for a budget support loan on concessional terms worth US$ 100 million for FY2019/20 and US$ 90 million for FY202021 from the World Bank” (STATEMENT ON THE ECONOMIC IMPACT OF COVID.19 ON UGANDA,, 19.03.2020).

It’s seems like they have the perfect cover for rising debt. They need to do something, because lots of industries are shut-down or silenced by the lack of tourism and foreign exchange. Also, the diaspora is hit and can therefore, not remit enough funds to boost the economy either.

The MoFPED really want to stain the economy more. To quote the IMF:

““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).

By borrowing close to USD 200 million is really pushing the envelope. As the interests needs to be served, the grace period might be short, as the state of finances across the board is souring. Therefore, the state will not get to favourable terms with this. The World Bank also has all other states begging for funds and possible grants to push the set-back of the pandemic. Not like Uganda is the only one crying out loud and applying for money.

This money will not be free money, but tainted money. This sort of funds is needed, because the state wasn’t planned nor had the capacity to have a rainy-day fund. The Petroleum Fund has already been raided and therefore, couldn’t come in handy now. This is the mismanagement, your already in a negative spiral with more and more loans. This is just adding two more and they are big. That will cost in the long run. It might salvage today and tomorrow. However, it will scar the next generation. Unless, someone is forgiving like these entities was in the early 1990s. Before the state again took up huge loans to cover deficits.

This is just the way it is now. Not a good look. Understandable in the growing crisis. However, that shouldn’t undercut the possible pain it will bring in the future. Save the day, but cause more harm tomorrow. Peace.

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