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Archive for the tag “Domestic Debt”

Bank of Uganda: Monetary Policy Statement for October 2019 (07.10.2019)

Uganda: Fresh report states that the debt-service has grown 129% within one financial year!

 

The Republic of Uganda’s economy is really reeling, it cannot be sustainable as the Government of Uganda is growing their debt like there is no tomorrow. While the fiscal growth is substantially lower than their rate of debt-service. As the growth of debt combined with lacking growth to substantiate the shortfall.

In addition, with the knowledge of added expenses, growing shortfall of funds in the upcoming Financial Year of 2019/20 and the election year of FY 2020/21. There will be more add-ons on the need for debt service, as the state already had loans outstanding, which the grace period ends and the debt-service begins on. Therefore, the amount of loans will transpire even more, than what is in this report. The endless cycle of debt and growth of it, is worrying, as well, as the state thinks that the magical wand of oil-money will clear this debt. Even as the first operational oil field and such has been postponed yet again.

Just look!

“The total Government of Uganda external debt service by end of FY 2017/18 amounted to US$275.75 million, which was an increment of l29% compared to US$120.62 million in FY 2016/17” (…) “Debt service of Uganda’s external debt is on the rise and outstripping growth of the country’s income, currently at 6%. This poses risks for future debt repayments, especially as the country continues to acquire external debt at less concessional terms, especially to finance the oil development programme” (P: 6-7, 2019)

“It follows that as interest rates increase, the debt service obligations of Government also increases. The rise in external debt interest costs attests to the fact the government is increasingly contracting non-concessional debt, which will increase the repayment burden” (P: 24, 2019)

“However, this may not be the most likely scenario, as most projects have been discounted and some excluded in the macroeconomic framework. With the development of the NDP III, additional project and other pipeline project related to the oil developments and other infrastructure, will increase the financing requirement of government in the medium term. The inclusion of the above projects will re-classify Uganda from low risk of debt distress to moderate risk of debt distress or high risk if the export shocks materialize. A downgrade would have significant implications for the program with the IMF, where Uganda’s credit risk rating will worsen; implying that accessibility of nonconcessional financing will be limited. This will limit credit to Uganda to only concessional and grants financing.” (P: 28, 2019)

You don’t need to smart about it, as the state has bigger budgets with higher shortfall in the economy, combined with debt service and higher interest payments on the growing amount of loans. You know sooner or later, the economy will tank, as the fiscal responsibility is taken for granted and that fresh funds are lacking, because these are taken out of the economy to finance the payments of the old debts. Instead of generating growth and actually naturally grow the economy, by spending and investing as a state. The money is taken away to service debt, instead of building the state. That is what they are doing and at a alarming rate. Peace.

Reference:

NEC1-19 – ‘REPORT OF THE COMMITTEE ON NATIONAL ECONOMY ON THE STATE OF INDEBTEDNESS, GRANTS AND GUARANTEES’ June 2019, Parliament of Uganda

Bank of Uganda: Monetary Policy Statement for April 2019 (01.04.2019)

Bank of Uganda: Monetary Policy Statement for February 2019 (07.02.2019)

Bank of Uganda: Monetary Policy Statement for August 2018 (13.08.2018)

#UGBudget18: Museveni – Was this a budget speech?

I don’t know where start or where to finish. As I am not a tool of propaganda and here to make the President look like super-star with a brilliant mind. Warning the media, banning Police Bond for Killers and all other spats of nonsense, which has nothing to do with the budget. It is just like he has defend himself. As President, he even attacked MPs and their attitude. They were ATMs to their voters, something he is and been called himself. He even recently tried to bribe his MP into position in Rukungiri. So that the President has short-term memory is evident.

You know he is in self-hostile territory, when one of the biggest donors and on of the biggest media owners Aga Khan gets a warning. Surely, the President cannot handle journalism and only care about praise. He cannot manage that people are looking into the growing debt. As this budget alone is 10 trillion back-pay of loans of the 32 trillions spent. While there is shortfall and growing deficit and the donor funds are still dwindling. Therefore, the need for loans to cover the shortfall is needed. So what the President is creating is a debt-trap. He can say he managed that since he used 27 guns, but different to blow former-leadership into oblivion and actually being able to repay your debt.

I am just awaiting the salute and the simple minded changes he is progressing into middle-income country, as the President is showing less intent of doing anything. He just talking about nothing and everything. Quoting the bible and acting holier than the pope, while warning everyone else. Not that it is securing anything. He will secure it all, as he is the man who has the answers. If this is getting boring, is that he has done this for 32 years and counting. And has not changed, other than his face and tenure of hair on his head.

It is like he doesn’t care and just say whatever that is on his mind. No one will fact-check or really check the relevance, because why mind. Its a deluded old man, who has been so long in power, that the ones going against are either in jail or possibly monitored by the sleeping police officers his been talking about. He is again blaming the mindset of Ugandans. Because there is never his fault. He has just been running the enclave and people gotten lazy, awaiting handouts. Not like he has delivered any of his pledges, built institutions or prosperous organizations for the citizens. That is just his lack of mindset and work ethic.

Therefore, there is no need to really dig deep into the speech. It is mere facade, a mere forged mirage of utter nonsense. A speech rampant of lies and warnings. If your a journalist or MP, you should feel offended. Because he expect to be praised, while your supposed to carry the nonsense from him.

The saddest part is that he takes no responsibility, that he has no accountability or no common sense. That this man just continuing to utter these words, like a word-salad of mockery of intelligence. While expecting that the spinning-machine of his party, his spokespersons and friendly media will make him look a giant. They will eat the crap out of it and make it look like gold, but its only fools gold. Not worth the bling its made off, better to buy a Rollex in Wandegeya, it will at least fill your tummy for a moment. Because the fools gold will be worthless and just ready for the bin.

President Museveni has no cards to play or nothing to say that changes the narrative. Only 1986ing the world and hoping he can get away with it. However, the debt trap should worry him. Nevertheless, it is the next generation that will pay-back it and he will be dead by then. Peace.

The Creations of districts: Shows growing expenditure, not only at Parliament, but also at local level!

Local governments are supposed to be financed with 30 per cent of the national budget but this has never been possible; sometimes it is as low as 15 per cent. This continues to stifle service delivery,” said Mr Cuthbert Felix Esoku, the Mbarara District chief administrative officer” (Mukombozi, Rajab – ‘Government lacks political will to improve district funding, say local leaders’ 09.11.2017, Daily Monitor).

Sometimes I wonder, if the government understand what it does, or if the sins of the 9th Parliament is hitting the 10th Parliament hard. Also, that the President is lax on caring, because he wants his cronies well off, just like former Prime Ministers and Vice-Presidents are getting 20 million Shillings Yearly as a Pensions, without the perks they are getting too. Therefore, the silence from them, as they are highly paid without doing anything for the NRM. Their ills and the growing Local Government is costing. Not only in Parliament, but in the districts itself. Today, the issues of Parliament is hurting, but none is addressing the local issues. Which is the reason for the lack of money and needed supplementary funds for the Members of Parliament (MP). Take a look!

Parliament is seeking Shs 3.3 billion for the emoluments of twelve more legislators starting July 1, 2018. According to the parliamentary service commission, the number of MPs will increase from 453 to 465 at the start of the of 2018/2019 financial year when new districts and municipalities come into effect” (URN – ‘ Parliament seeks Shs 3bn for 12 new legislators’ 22.04.2018, The Observer).

I am amazed about the amounts of districts and the rise of cost. This not only the share Members of Parliament, the lack of space for their seats and the possible rebuilding of the Chambers. Because the amounts of MPs wasn’t built for this amount of people at the same time. Therefore, the Parliament needs funds and budgets to fit. That says the foolishness of the new districts in that regard alone.

We know, by recent news that the state cannot afford to hire civil servants to Local Government that as is, and that is without the new enclaves or districts created by the state. That is not just the salary of the MPs whose recently elected, while the Electoral Commission are stretched in getting the by-elections and the MPs their seats. That is just beginning, as the growing debt and the interest are growing. While the Parliament is lacking space and the infrastructure and the local hires are not there.

That the state has under President Yoweri Kaguta Museveni gone from 33 districts in 1986 to about 136/7 after 1st July 2019. Which was ushered in July 2015, a year before the General Election 2016 and fitted the needs of the National Resistance Movement and keep up with pledges made by the President. So every single town is a District and none is inter-connected it seems. Every hill and top is Sub-County. Just the way NRM Regime like it.

In 2017, the Parliament gave a tender about 260 Billion Shillings to ROKO to build a 500 seat size of chambers there. So the payments and monies are there, when needed, as the state can configure and find money for this. But they are usually lacking funds for the civil servants and for the ones serving in public offices in low-level positions. Even not hiring the needed ones in the districts, schools and so on, as there are thousands of jobs that the Ministry of Public Service is not allowed to hire by direction of Keith Muhakanizi, the Secretary of Treasury said there was no funds for that.

But now, suddenly, just like there is funds to athletes, there are funds for new MPs. This is happening as the new possible Social Media tax and also the Tax on Mobile Money. So not like they don’t have projects to use it on. It is all of them districts that needs mansions for District Police Commanders and Residential District Commanders, who all need a palace to live in. Also the need for a local government building and facilities, they cannot run the district from a shack. If that means all citizens has to bleed, that is okay, they deserve this cronyism.

This is the pile of bills made by the amounts of districts, the running costs isn’t just the 3 billions supplementary for the MPs there, it is the new civil servants, buildings and develop these districts. Unless, they want to be ghosts on the paper like schools, teachers, students, refugees, roads and development projects in general.

So, if you don’t see the issues I see, then your either in on it or your just thinking. Its a lost cause, because the President is ushering it in and sanctioning it. This to feed off his cronies and making sure they get jobs locally. Instead of building good districts, he has just chopped them in two or made new ones. So the development and local changes can be made right before elections. That to secure his own candidates for the Parliament too. So for the President its a win-win.

Nevertheless, this has clearly stretched the budgets, the need for public officers and civil servants, as well as more appointed local leaderships. All of these needs salaries and pensions, which means the grows and becomes more expensive with the growth of expenses like these. This is happening at a rate and time, as the growing debt and interest rates are rising. Therefore, the negative affects of it all needs to be put in perspective. However, that is not interesting to the NRM as they cannot question their king, without insulting his intelligence or his will of staying there. That is shown too…

Well, this was a bleak and sad story, but needed this perspective, since the cost of 136/137 districts should be discussed, not only the cost of MPs and the cost of building a new chamber at the Parliament. Peace.

Uganda Bankers’ Association: Position of Financial Institutions under the UBA Umbrella Notices Recieved from URA to Obtain Information of all Account Holders (08.04.2018)

Prof. Tumusiime-Mutebile: Bank of Uganda is Soundly Managed (05.04.2018)

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

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