Opinion: It has now been 425 days without a Governor of the BoU…

“The appointment of the Governor is a prerogative of H.E the President subject to Article 161 of the Constitution of the Republic of Uganda, which states that; the governor, the deputy governor and all other members of the board shall be appointed by the President with the approval of Parliament. To that effect, if the Governor dies, resigns, or otherwise vacates office before the expiry of the term for which he or she was appointed, the President may appoint another person in his or her office, and the person so appointed shall hold office for the unexpired period of the term of office of the person in whose place he or she is appointed. In the absence of the Governor, the Deputy Governor will perform the duties of offices of the Governor and Deputy Governor until the new Governor is appointed. Indeed, The Bank is currently operating efficiently under the direction of the Deputy Governor. He is supported by a team of Executive Directors and technical officers. The appointing authority – H.E. will the right time and moment, appoint a Governor. So let us wait on him” (Bank of Uganda, 23.03.2023).

Since the 23^{rd of} January 2022, the Bank of Uganda has been without a Governor. The Deputy Governor has run the Bank since then. It has been 425 days or 1 year and two months without an appointed governor. That is really telling and compelling that the President haven’t appointed anyone for so long.

The Bank of Uganda is clearly not a priority, because By-Elections and getting people elected to office is coming first. The appointments of Speakers and other high ranking official roles gets pushed instantly. However, the BoU can just live without a head and a master at the helm. The Deputy can steer the ship and without question too, apparently.

You know the mission of the BoU when it states this:

“The Bank of Uganda (BoU) is the Central Bank of the Republic of Uganda. It was opened on August 15, 1966. It is 100% owned by the Government of Uganda but it is not a government Department.  Bank of Uganda conducts all its activities in close association with the Ministry of Finance, Planning and Economic Development(MoFPED). Bank of Uganda is responsible for the formulation and implementation of monetary policy as well as regulating & supervising financial institutions” (BoU – ‘Overview – About BOU’).

It isn’t just a run-of-the-mill organization, but a vital one. It is the place for monetary policies and uphold the national currency. The BoU is by just these things an important piece of the puzzle in the Republic. That’s why its extra weird that it has been without a leader or a governor for over a year.

This shows that the President is just waiting and waiting. That the President isn’t mindful or caring about the concerns of the BoU. When he cannot find a suitable character or leader to become the next the Governor. We know he kept the previous Governor from 2001 until his death in 2022. So, he enjoyed the loyalty and the work of the predecessor. However, that shouldn’t stop His Excellency from appointing another one.

“The appointing authority – H.E. will the right time and moment, appoint a Governor. So let us wait on him” (Bank of Uganda, 23.03.2023).

It is just foolish that the institution and national bank is waiting this long for a new governor… seriously this is bonkers. 425 days and counting without a head or the appointed chief. This just shows that the President doesn’t think this is important or that serious. Peace.

Opinion: 2 Trillion shillings is suddenly needed to cover the deficit

A letter dated to the 7^th November 2022 by the Minister of Finance, Planning and Economic Development, Matia Kasaija was leaked titled “Request for Proposal to Finance the Government of Uganda Budget for the FY 2022/23”. In that letter, the Minister is specifying the needs to borrow €500 million euros. When you convert this to Ugandan Shillings it ends up being 1,957,704,000,000 or about UGX 2 Trillion Shillings. That’s a lot of money that the Government and the MoFPED needs to borrow.

This is the definition of deficit financing. The cycle of bad loans in combination of lacking domestic revenue. The only way to be able to cough up funds for the short-fall in the short-term is to add additional loans. So, the cycle continues, the state take one loan after another. Loans upon loans to cover for the old loans. While also borrowing more money to be able pay expenditure and government expenses.

That’s why the idea that the MoFPED is asking for this now isn’t surreal. It is the bleak reality and the misfortune of a bloated government. The government has to many entities, to many representatives and a local government structure, which is too expensive. Expensive in the sense, that the government cannot foot the bills and don’t have the revenue to carry the expenses. That is living lavish and someone else is picking up the tab.

We already know the state is running out of loss, when the budget was forecasted with a huge leap of faith that grants and such would cover about 40% of the budget. That is telling and it’s really showing the lack of it when the state this early in the Financial Year needs another 2 trillion shillings loans to cover it’s expenses.

The MoFPED wouldn’t call for this loan and at these levels… if they didn’t know there was a short-fall or a lack funds. There is deficit and that’s not shocking. It is just worrying that it’s happening at this extent and is so normalized. While we are seeing the 11^th Parliament is following where the 10^th Parliament left off. Accepting loans after loans on development projects and other additional expenses, which only creates a huger debt-burden down the road. These roads or infrastructure projects has to be covered and they are not money generating enterprises. Therefore, the cost of doing it will be ten-fold in the long run. Especially, when you don’t have money for the upkeep or the ones doing the day-to-day works on it.

That’s why you know the latest revelation of this loan is just concerning. It is not a winning bargain, but a proof of mismanaged and lacking progress. When the state cannot sustain itself or be able to get a tax-base to cover these expenses. That’s because the state is wasting funds on paying for old debts and interests, which are far over the grace-period. Peace.

Bank of Uganda (BoU): Government has not failed to pay Bank of Uganda (20.09.2022)

The Government own 11 trillion shillings to the Bank of Uganda [and out of that 3 trillion shillings in advances from the last financial year!]

The National Resistance Movement (NRM) are ruining the economy. They have a deficit financing that is revealing to deplete all funds and all sources of revenue. That’s why in the Leader of Opposition statement published on the 13^th September 2022. The Leader of Opposition Mathias Mpuuga MP in his statement is showing a staggering issue of fiscal nature.

The Government of Uganda (GoU) or the National Resistance Movement (NRM) are now owning 11 trillion shillings. Out of those 11 trillion shillings, there is 3,03 trillion shillings it got in outstanding advances in the Financial Year of 2021/2022. Because of this, the Government of Uganda lacks fiscal funds to repay their own National Bank, the Bank of Uganda. It has taken money from one post to cover other posts, in advance, but it has no plan of returning these advances.

The addition trouble with this is that the International Monetary Fund (IMF) has stopped releasing funds or loans to the Government of Uganda until these advances are paid. That is again hurting the funding of the Government and the operational funds of the state. Since the IMF will not cover the deficits or the lack of funds in the GoU. The GoU is running so low that it’s not able to repay their own advances, which it created from the BoU.

This just shows how dire things are… this is only talk of 3,03 trillion shillings. The GoU budgeted itself with a 25,78 trillion shillings in domestic revenue in the budget of FY 2022/23, but we can wonder if the GoU has any of funds to recover or to spend on the advances in question.

If you wonder what mismanagement and how destructive a debt-cycle is… it is becoming very eminent that the NRM and the GoU has stretched it out. They are not able to get or find sources for fresh funds. The state is not able to get enough domestic revenue to even cover the basics. That’s why they are even shortfall on 3 trillion shillings to the Bank of Uganda.

This should be depressing and be worrying, but it is just another day in the Republic. The Value of Money is gone. The money and funds are just missing. Loans for development projects, day-to-day activities are just gone in thin air and they have no plans to repay them. If the NRM and GoU does this to its own Bank. What is it doing to the Multi-National Banks and Monetary Instruments it loans from on the regular?

That should put shiver down your spine. This is a sign of a financial downturn, a sort of financial self-destruction and possibly re-structuring of old debt. Because, the state cannot even carry the advances it took out in FY 2021/22. Peace.

The Art of Deficit Financing: Budget 2022/23 and the worrying affects of the growing debt…

“The proposed budget for FY2O22/23 hos increased to UGX 47.25 trillion from the approved budget of UGX 44.77 trillion in FY2O21/22. ln the proposed budget, recurrent expenditures amount to UGX 33.54 trillion (71%) while development expenditures amount to UGX 13.70 trillion (129%). Worryingly, the projected revenue collections of UGX 25.54 trillion cannot fund the country’s entire recurrent expenditures” (Opposition Response to the Annual Budget Estimates for FY 2022/23, 03.05.2022).

When you read the first numbers on the Budget for the Financial Year of 2022/23 you see a problem that has been a long lingering issue. The National Resistance Movement (NRM) and Government of Uganda (GoU) has done this for several of years now. The state has banked on loans and grants to cover the deficits. While the state is budgeting with a deficit financing method, which is far from covering fiscal funds by the lack of domestic revenue. That’s why the rising debt and the cycle of recycling debt isn’t making things better.

Just read this paragraph here:

“It is critical to note that debt management costs hove risen from UGX 8.58 trillion in FY2017/18 and ore projected to be UGX 15.94 trillion in FY2022/23. This translates to on increment of 86%. The costs take first coll on the budget to cater for interest payments, commitment charges, debt management fees and amortisation. Therefore, from the onset 33% of the proposed budget will

not be available for service delivery. instead, it will be utilised for payment of partial debt commitments” (Opposition Response to the Annual Budget Estimates for FY 2022/23, 03.05.2022).

Just seeing this number, as you see the lack of domestic revenue to cover the budget of 47 trillion shillings, which is only at the level of 25 trillions. While the project debt management is put to about 16 trillions shillings. That means most of the domestic revenue would be used to pay old debt. Unless, the state plans to take out more loans and recycle debt to pay the old debt. That is just pushing the problem further down the line and get more interests as well. Therefore, the state finances isn’t tricky anymore, but a tragic phenomenon. These sorts of numbers are getting closer to default and a possible debt trap at one point. As the state needs more loans to cover current loans. That is not how to run a nation and neither how to run a fiscal responsible government.

The numbers becomes even more striking:
“The advance effect of this astronomical level of borrowing is felt through interest payments of over UGX 5.5 trillion in FY2O22/23 rising from UGX 2.4 trillion in FY2017/18. An increment of 130%. This is coupled by external debt repayments that ore projected at UGX 2.4 trillion in FY2022/23 rising from UGX 589 billion in FY2017/18. An increment of 307%. These toke first coll on the revenue collection and reduces funds available for service delivery” (Opposition Response to the Annual Budget Estimates for FY 2022/23, 03.05.2022).

We see the debt management and now we see the rising interest payments are also doing the same. The ones that has been crying wolf and worried for the rising debt portfolio is catching up with the government. The Ministry of Finance and Planning and Economic Development (MoFPED) has failed to comply with the mechanisms and the codes of Public Finance and Management Act. Clearly, the Government and the all the Ministries has to be following suit.

These sorts of numbers should strike fear of a debt default and a crashing economy. The art of deficit financing … is now becoming a growing issue. The state cannot hide from this and this should worry the citizens. As there is nothing given that the creditors will be merciful or give way. They might … be vengeful and take collateral over failure to repay the debt. Peace.

Opinion: The Budget for the FY 2022/23 lacks 2,6 Trillion shillings!

We know that the state during the recent years have been running on deficit financing. This means it takes up loans to pay up for new loans to pay recurring expenditures. The state follows up this negative spiral of lacking of funds to ask for more expenditure than it has funding for. This means, the state is fiscally indisciplined and misusing funds, as they have to later find sources of revenue or take up more loans to fulfil the voted expenditure it has.

That isn’t a sign of a growing economy, but a way to further more loans and add more debt, which has to be paid back with interests in the coming years. As the parts of the government budgets are becoming more expensive, as the state has to fulfil and repay on the debts it has already taken out over the years.

The Minority Report states this:
“The government contradicted itself when it indicated that there would be limited supplementary budgets in FY2022/23 but at the same time elaborately articulate unfunded priorities or additional expenditure needs of UGX 2.62 trillion. Unfortunately, the majority report is silent on this fiscal indiscipline. The indiscipline of supplementary budgets is bound to continue and government hos sent indications that a minimum of UGX 2.62 trillion will be sought in due course” (A MINORITY REPORT ON THE NATIONAL BUDGET FRAMEWORK PAPER FOR FY 2022/23 -2025/26, January 2022).

This here should create headlines, because this is planning to take out loans to cover the current debt, which this will be. Since the state needs borrow or take up loans to cover these expenses. This just show how reckless the state is carrying it’s budgets.

As it can create 2.6 trillion shillings without having any sort of funds or revenue to ensure it. Which means someone else has to foot the bills currently. A creditor will take the debt and make sure the state can pay for the expenses. However, the future citizens has to repay for this and that is fiscal indiscipline and deficit financing. As the deficit needs financing and the shortfall has to be covered, which tends to be covered by debt.

This is unserious of the government and a sign of worry. As they are doing this on the first budget for the financial year and we can know additional supplementary budgets will most likely become bigger than two trillion shillings. We should expect more and the shortfalls might become worse, as all revenue isn’t recovered or the estimated tax-base isn’t as huge as earlier estimates and therefore the state couldn’t perform or have fresh funds to pay for the reoccurring expenses. Peace.

Common Leauge of Ugandans in the Disapora: Uganda IMF US$1 Billion Planned Disbursement (24.06.2021)

Opinion: Museveni and the NRM is in a ill-advised debt-cycle

The National Resistance Movement and President Yoweri Kaguta Museveni have created a negative spiral of debt. The state have taken out more and more debt over the years. The CSBAG, Uganda Debt Network and other organizations have spoken out about this. As the state have the need to pay more in interests and it takes away more from the general budget.

Now the state is saying it has 65 Trillion Shillings in unsustainable debt. That is happening after the Parliament have had sessions over the last few years. Where the only thing they do is to vote over debt and approve more loans to the state for various of development projects, roads and you can wonder if it does anything.

The state is now owning a lot of money. More money than it usually uses in a state budget. The state budgets of late have had half of the revenue coming from domestic taxes and the other either grants or loans. There is also additional supplementary budgets, which is coming in cycles during the budget year. Which is adding more debt… and creating more debt.

There been worry about the rise of debt, but the NRM and the President has said it has been done within reason. However, that is now the chickens coming home to roost. There is enough problems ahead and the state has created this financial conundrum. It has been done deliberately over time.

The Parliament is on the regular issuing now loans… and taking new loans. While hoping one day they have the revenue to actually do these things. The state is spending money and funds it doesn’t have. That is an unforgiving task… and the NRM cannot run away from this.

The NRM have created problem. The appointments of the President is doing this. The Bank of Uganda (BoU) and Ministry of Finance, Planning and Economic Development (MoFPED) should have seen this coming. They have been looking over the expenditures and the interests rates. They know when the grace periods of the loans are over. These folks are the ones who has the oversight and supposed sound judgement to advice the Parliament to accept all these loans. However, that is clearly not the case.

The state is crippling its budgets, overspending and over-loaning funds over time. Now, the creditors and debtors wants their pieces of coins back. They cannot bail on it or default on it. Then the state will not be trustworthy and be credible as a economic broker. The state is clearly struggling and lacking funds. That’s because they are having trouble to raise domestic revenue and have to high costs.

This is a self-inflicted ill-advised debt-cycle. A government not listening to CSBAG, Uganda Debt Network and others. The NRM and Museveni should have done that. It will be harder for them to get solidarity this time around. As the Museveni era of now is destructive. The state actions against its own citizens and totalitarian acts. Is not the ones who makes outsiders forgiving like it did in the early 1990s when Museveni was part of a new group of leaders that the West had hopes in. However, that boat has sailed and the truth has come out. That is why Museveni is still there and depleting the state like there is no tomorrow. This is why the debt is rising and its run without any balance of the budgets. That is why the debt is rising and there is no way out.

They want debt forgiveness. However, getting that now will be a feat, but not sustainable either. As this state will just take out new loans and not re-coup or try to absorb the lack of revenue, which is causing the problem in the first place. That is why the state doesn’t have any liquidity or equity to trade for the lack of revenue. It is just a sinking boat and the captain seems clueless…

Deficit financing can only take that far and now its at the end of that journey. Peace.

Uganda: Deficit financing is creating an evil circle financially [72% of revenue spent on debt repayment!]

“By implication, if sh15.7 trillion for debt service-related expenditures is subtracted from the sh21.9 trillion the Government will have generated in revenue collection, it means that 72% of the country’s revenue collection would be spent on debt repayment. The committee raised concern that the high rate at which government is borrowing is not commensurate with the low level of increasing government revenue collection and, therefore, violates the country’s charter of fiscal responsibility. The report indicates that as of June 2020, Uganda’s public debt had reached $15.27b, which is equivalent to sh56.9 trillion. Out of this sh38.9 trillion is external debt and sh17.9 trillion domestic debt” (Moses Mulondo – ‘Govt earmarks sh15.7 trillion for debt repayment ‘ 03.02.2021, New Vision)

The news on how the state got to repay old loans is coming out. As the Ministry of Finance, Planning and Economic Development (MoFPED) have put forward the budget for the Financial Year of 2021/22. This is initially telling stories on the revenue or tax base, which will be preoccupied or used for paying debt repayment.

Just to put things in perspective. This is the definition of ‘Deficit Financing’:

“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).

This here is telling the story, which the state media and others isn’t telling. Because, they are borrowing funds to cover up for the deficit. The deficit is created as a result of the rising cronyism and misuse of funds. These funds have to cover the bloated government and its staff. That is why deficit is created to fix the shortfall between the needed revenue and the expenditures of the state. They are using loans to cover and fix the lacking revenue of the state. If the state had enough funds through its tax-base, the state wouldn’t need these loans in the fist place.

However, the state have prolonged with this game over years. The state has used loans to cover its baseline and usage of funds. They have went out for foreign creditors to get enough funding. That shows that the state haven’t been fiscal responsible. They have misused the authority of the state and taken up loans, which now accumulate to over 70% of yearly revenue. While this is happening. The state and the Parliament is still issuing new loans and creating a bigger debt burden. That is what they are doing… and that cycle must stop.

Soon, all revenue will go directly to debt repayment. We know the state wants to have debt relief, but this is self-created by the regime, as they are borrowing for basic commodities and necessities. They are always loaning funds to build development projects and infrastructure, which will be costly. As funds are lost and misused in the building of these. That is why the price of road is so expensive and also projects in general. Therefore, the state is crewed over more than it can swallow.

That is why the state is deficit financing and its become a burden, which it cannot carry. The debt is not sustainable. When 72% revenue is spent on debt repayments. That shouldn’t be a thing, but that is fiscal policy of this regime and apologist cannot hide the fact. They have run down the state and taken up loans they cannot carry. Peace.

Opinion: When the NRM is more important than the elected officials…

For years there been promises of bicycles to the Local Councillors 1, the village leaders and it never happened. This was supposed to deliver for the about 69.000 villages. The state was bound to buy 70,000 bicycles and State Minister of Finance David Bahati renewed this pledge in 2019. However, it never amounted to anything. So, the National Resistance Movement (NRM) government have pledged this to the LC1 Councillors for about a decade without delivering.

However, today the same NRM suddenly have 65,000 bicycles to the NRM Village Chairpersons across the Republic. In the middle of August a year after the renewed pledge to the elected village officials. The state and governing party is giving the same amount of bikes to their own.

The “Yellow Bicycles” is just so fitting. This is a easy ploy and usage of an old pledge to their own. Instead of giving it to whoever represents the villagers across the Republic. They are instead only giving this gift to their own. This is making the NRM greater and flex. Because, everyone cannot have VW Beetle like late Abiriga. That is something we know the Movement cannot afford…

Nevertheless, these Yellow Bicycles are just so conveniently fitting into a government scheme and appear right before the elections. It is just like naming the LC1 Councillors Bicycles into the Yellow Bicycles schemes. It is about the same amount of bikes and has the same means even. Only difference, instead of being shared between all sort of political parties. It is a inner-party act.

It is to show greatness in 2020. To give a small donation and usage of billions of shillings on bicycles. In 2010/11 it was bound to be 11 billion shillings for the same. Now years later it might be more costly and could be in the amounts of 30 billion shillings. Who knows at what cost and who traded them.

We are seeing that old promise, an old pledge has been renewed, sort of delivered, but its biased and have become NRM thing. It is not a national thing or a government one. It is a party scheme and a Movement drive. This is not for the villages representatives, but for the NRM village representatives. It is not like Resistance Councils are still alive and kicking it. The system is a multi party one. With that in mind, the NRM only giving to their own, which is fine.

However, this is supposed to be all village councillor, not only the ones wearing yellow and members of the Movement. This was supposed to be to all village councillors, no matter what party or creed. Nevertheless, that is clearly not the aim anymore.

The Movement is showing its greed and selfishness. Who knows where the money comes from and who earns on the trade. The NRM Village Councillors are used for this and toyed with. They are giving a small token for their loyalty, but the big-men is eating the whole plate all year. That is why something like this is only a ploy, a small arrangement and act of charity. However, this is not building long lasting structures.

This is for the NRM and by the NRM. While using a scheme that was supposed to be a government act for elected village officials. They can rewrite and change the narrative, but that doesn’t make it true. Peace.