MinBane

I write what I like.

Archive for the tag “Economic Activity”

The National Coffee Act of 2018: A sour cup of Coffee or just another Robusta?

It is hard to see any significant change of the Uganda Coffee Development Authority, as the law of 1994 is planned to be repealed, as the Cabinet accepted a new bill yesterday at the State House. Let me explain, It would seem more reasonable, if someone leaked the text of the law, but the short tide bottlenecks of information leaked. That information is showing, that it is more of the same. Just some new buzz-words, to keep the donors buzzing.

Since the UCDA are already in charge of monitoring, pricing and promoting coffee, both internally and externally. They are supposed to help raise the quality of the coffee and educate farmers, both in production of better coffee, but also raise the yields for the cash-crop. The UCDA is rally a state organized body in both education, trade and promoting of coffee. Where all parts of the transaction from the seedlings to the trade of the ready beans has been in connection with the government body.

That is why the Cabinet decision that is released to the public, the one page dossier, as the law and the new provisions aren’t out, but if these footnotes are the realization of the changes from 1994 to become the new law in 2018. There are really just putting in the word sustainable and harmonize the roles of all the roles. Which is fancy lingo, for making sure everyone along the line is taxed and made sure they pay for the government services. Since they are already having the mandate by the law of 1994.

As sub-section 4 in the UCDA Act of 1994 states:

The functions of the authority shall be— to issue certificates in respect of the grade and quantity of coffee; to register in accordance with guidelines issued by the Minister, from time to time, on the advice of the board, all organisations and bodies applying to market coffee; to liaise with the Bank of Uganda in respect of repatriation of foreign exchange obtained from the sale of coffee; to set the quality control standards under which coffee is sold; to certify all coffee exports; to collect, maintain and disseminate statistical data in respect of all aspects of the coffee industry; to advise the Government on the mechanism for determining the minimum price for the sale of coffee; (h) to monitor world market price changes and adjust the minimum price on a day-to-day basis to reflect the changes; (i) to research and make extension arrangements through the Ministry responsible for agriculture or any other organisation established in the country for the purpose; (j) to reconcile coffee subsector policies with the macroeconomic policies of the Government; (k) to liaise with the International Coffee Organisation and be responsible for the administration of the stamps of the organisation; (l) to liaise with other international organisations and promote Uganda’s coffee on the world market; (m) to be responsible for the overall supervision of the coffee subsector, including related industries, and advise the Government on coffee subsector policies; (n) to organise training for technicians, coffee processors and quality controllers” (CHAPTER 325 THE UGANDA COFFEE DEVELOPMENT AUTHORITY ACT, 1994).

So when I read from the spreadsheet from the Cabinet meeting at the State House, where the gist is to replace the 325, because they want to development of competitive, equitable and sustainable coffee, promote Coffee research, good Coffee farming practices, domestic coffee consumption and add value to the Coffee. Also, provide the Authority regulate all on-farm and off-farm activities in the Coffee Value Chain, streamline and harmonize the institution in the development of the Coffee Sector and to promote the Coffee sub-sector.

As what I see, the UCDA Act of 1994, not only hold the grabbing hands on all of this, but the mandate of the Authority is already, just not managed well, apparently. If the state cared about the Authority, they wouldn’t lack needed staff, as the Auditor General Report of December 2016, said the staff had 29 open positions, I don’t know if its as bad today, but wouldn’t be shocked if there was openings that the UCDA couldn’t fill, because of lack of funds.

What is striking to me, is that what the Cabinet Meeting of 21st May 2018, is what is in the statute of 1994. It just using a few different words, but if they cared about the UCDA, they would fund it properly and also actually have proper oversight of the operations. As the UCDA has often given away bad seedlings to Coffee farmers, in the same fashion as the Operation Wealth Creations has to its SACCO’s around the Republic. Like the Auditor General report of December 2016 says: “ Failure to plant and maintain coffee seedlings that were distributed and received by the farmers is wastage of Government Funds and eventually leads to failure to achieve planned coffee outputs at national level. Further, beneficiary lists withfarmers that never received inputs may be an indicator of irregular dealings on the part of seedling suppliers” (AG Report on UCDA December 2016, P: 19).

Therefore, the changing of words within the law is not fixing the remedy of the goodwill to generate more coffee and better yields. It is actually giving the king, what the king needs. That is not more fancy lingo, but actually actions and funds, also accountability, so that the farmers and the other part of the coffee production chain. Can all benefit from the Authority. On December 2017, the MoFPED delivered the National Budget Framework, which said this: “Continued implementation of the Coffee 2020 road map aimed at achieving 20million bags of 60Kg each per annum, including supporting research interventions at the National Agricultural Coffee Research Institute (NACORI) to produce high yielding coffee varieties and disease resistant tissue culture plants for coffee as well as development of a National Coffee Bill, 2017 that focuses on developing the entire coffee value chain and enable the country consolidate its dominant position in export earnings and employment” (MoFPED, P: 18, December 2017).

Therefore, the Cabinet meeting has initially decided to follow the guidelines of the National Budget Framework, as it was in December 2017. That is not surprising, but what is weird is the wording and how little change it is from the original law, that they are repealing. Unless, they have some magical formula sprinkled over it, making it a beautiful cake, instead of a boring bun with a little whipped cream. Because that is what it seems.

If you read the objectives of 1994, it doesn’t seem so far away from 2018, does it?

The objectives of the authority shall be— to promote, improve and monitor marketing of coffee with a view to optimising foreign exchange earnings and payments to the farmers; to control the quality of coffee in order to ensure that all coffee exported meets the standards stipulated by the contract between the seller and the buyer; to monitor the price of coffee in order to ensure that no export contract for the sale of coffee is concluded at a price below the minimum price; to develop and promote the coffee and other related industries through research and extension arrangements; to promote the marketing of coffee as a final product; (f) to promote domestic consumption of coffee” (UCDA Act of 1994).

That seems a lot like the spreadsheet of the Cabinet from yesterday, right?

Its only the value chain and add value on the coffee that is very new, but the rest more of the same. I am baffled or even shocked by this. It is like the Cabinet haven’t read the old bill or cared about the provisions there and thought. Maybe we should have better oversight of the Authority, instead they are changing wording and thinking that is magic wand to change the current predicament. If they wanted real change, they would have reformed the organization internally and used the provisions already there. But it is easier to make a leaflet, than change people’s mind and allocate funds.

Good morning and smell the coffee, well, I smell it, but more of the same. Just attached “sustainable” on the package, but taste is the same as yesterday. Peace.

The Spreadsheet of the aka National Coffee Bill of 2018!

Advertisements

Opinion: NRM, It is hard to see Middle-Income Status coming quickly!

He explained that the NRM manifesto is anchored in Vision 2040 and the second National Development Plan. It commits to deliver Ugandans into middle income status and to ensure sustainable development” (Mubiru, 2018).

Well, it is that time of the year. To prove the National Resistance Movement (NRM), that their empty promises. Because when you collect the news together. It is easy to see how things doesn’t add up. If the NRM was on their way to sustainable development, like Prime Minister Ruhakana Rugunda talked about earlier last week. Then all of the news coming wouldn’t fit. The narrative cannot be growth and development, when all of these issues are happening at the same time. It doesn’t fit. The glove has to fit the hand. The three things that doesn’t add up is the missing funds for the Presidents own Village Poverty Program, relief food for Karamoja and also a missing sugar factory.

Village Poverty Program:

State House has said it needs at least Shs 5bn to roll out the model village poverty alleviation initiative by President Yoweri Museveni. In the request contained in the Ministry of Presidency’s policy statement and budget estimates for 2018/2019, State House said the existing Shs 1bn budget for the project is too little and therefore a 500 percent increase is vital. The current Shs 1bn has only managed to establish small scale commercial agricultural farms in 21 model villages. The country, according to Electoral Commission of 2016 data, has 59,700 villages” (Okello, 2018).

Donate relief food:

The government of China has donated food aid worth $5 million (about Shs 18bn) to the World Food Programme (WFP) to support a feeding programme for vulnerable groups threatened by malnutrition in the Karamoja sub-region. More than 2000,000 people mostly school going children, infants and mothers are threatened by malnutrition in Karamoja according to official figures” (Lyatuu, 2018).

No existent Sugar Factory:

It is five years, since Atiak Sugar Factory under Haryal investment Holdings Limited was rolled out in Amuru District, to commence sugar production, but has since stalled, leaving a number of sugar cane farmers stranded. “The people shifted from food crops with hope to earn from sugar cane. Out growers are now worried that the factory will not take off in time to fully untilise the 4,000 acres planted,” reads part of their petition. Kilak North MP, Anthonu Akol who read out the petition to the Speaker said that the farmers are stuck with no factory to sell their sugarcane and questioning why the minister of Finance, Matia Kasaija, sold to them hot air” (Kyeyune, 2018).

All of these issues shouldn’t be at this state, if the state was seriously developing and on the way to Middle-Income status. There are so many issues that is missing, not only the ghosts and the added debt ratio in the budgets. This is all minor measures in the bigger picture, but it proves the lack of governance and accountability, when the state can grab land in Amuru district, but never deliver the promised the factory. As this been going on for years.

That the middle income cannot be fulfilled when the village poverty is so prevalent, that the scale is not fitting the needs. You know that the state lacks resources and well-funded plans to even achieve this. The President should have made sure and ensured the progress and at the planning stages, it this is his program, to be sure about the right amount and needed facilitation to deliver to the needed villages. That is apparently a mixed bag wooh-ha and nonsense.

Last but not least, is the donating of food to Karamoja, which in it self a sign of lack of progress. When your not able to meet the needs of your population and have good enough agricultural policies and output to feed yourself and your own kind. You know that the Middle Income Status is far-fetched, when this is still an issue. You know there are miles afar from the promise land. That the NRM and the President is clearly not delivering. There is no excuse in the book, that can fix the grandest issues of not being able to feed all communities and districts of Uganda. You know they are far from Middle Income, when China has to donate food to you….

Enough of the nonsense. Peace.

Reference:

Kyeyune, Moses – ‘Acholi sugarcane growers seek Parliament help over stalled factory’ (16.05.2018) link: http://www.monitor.co.ug/News/National/Acholi-sugarcane-growers-seek-Parliament-help-stalled-factory/688334-4565238-ueostj/index.html

Lyatuu, Justus – ‘China donates relief food to Karamoja’ (19.05.2018) link: http://observer.ug/news/headlines/57707-china-donates-relief-food-to-karamoja.html

Mubiru, Apollo – ‘NRM Manifesto: The road to modernity’ (18.05.2018) link: https://www.newvision.co.ug/new_vision/news/1477948/road-modernity

Okello, Dickens H. – ‘Shs5Bn Needed for Museveni’s Village Poverty Alleviation Program’ (21.05.2018) link: http://chimpreports.com/shs5bn-needed-for-musevenis-village-poverty-alleviation-program/

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

Minister Kasaija are borrowing more money, because of a shortfall he say!

Uganda is your country. When you’re writing a story, ask yourself if it is going to build or destroy Uganda. Is it going to bring peace or anarchy?” (…) “I’m advising my good friends of New Vision that for the good of your country, do not publish stories that are not true. My telephone number is known by everyone, call me. If I can’t respond then wait, because I’m also a busy man but I’ll respond. Let me repeat, for the good of your country, please don’t publish false stories” – Matia Kasaija, Minster of Finance.

I know, some people get touchy when stories comes out. Out of the woodworks suddenly the questions arise and people are thinking? Why? Why does the state borrow even more funds, is it needed even? How come the State, who is already borrowing heavy sums of money from all sort of bilateral, multi-national banking institutions suddenly need to borrow money from domestic sources. That question should be asked and need to questioned. Since the reality of the matter, isn’t what it is used to, since this government cannot even explain where the PTA Loans went. It is amazing how things are going, that the State can take up loans like this after already no accountability on the previous ones. The same minister is already questioned for the loans done with PTA loans, who knows what else that has gone missing, as the GAVI and CHOGM Funds of the past suddenly vanished into thin air, hard not imagine that this could happen again.

“Yesterday, Monday 19th February 2018 the New Vision Newspaper front page lead headline stated that Government is borrowing UShs. 700 Billion to pay salaries for public servants. I would like to inform the General Public that this story was an exaggeration of the proposed borrowing that I laid before Parliament. We borrow to a large extent to finance capital development and production. In my letter dated 9th February 2018; I submitted a proposal to Parliament seeking authority from the House, in accordance with the requirements of Article 159 of the Constitution of the Republic of Uganda, to borrow additional Ushs 736 Billion from the domestic financial market to finance the Budget for FY 2017/18” (Uganda Media Centre, 2018).

This money will go to “development and production”. We can wonder where that is, if it is the bills of Gen. Salim Selah hotels as the seedlings delivered by, Operation Wealth Creation (OWC) is lack-lustre at best. Who knows where all the pooled monies for NAADS are going, but clearly not all of it is not going to micro-economic benefits for the society.

Shortfall is clearly there and the weak economy, that has been juiced up and run like a drunk seaman. That is why as the last end of bottle of beer is there and the need to go down to the bar and buy more brew on credit. That is the ordeal of the day. It is not a narration by Morgan Freeman and a beautiful tale of forgiveness and hope. No, it is a tragic day of even more debt, this time internally and used by the state. Since they are embezzling and taking away funds from the public. This will create more pressure for liquidity in the banks who borrows to the state, as this is taking from their own reserves to bailout the state. Eventually, the state has to find other funds to pay back the banks.

It doesn’t take a wise to understand, that adding more debt, while growing debt and also paying interests is a vicious cycle. They are recycling loans and adding more interests and more debt to be repaid in due time. We can just pound on that and wonder why the state hasn’t made a budget that is within the reach of the economy, but the government isn’t like that. They are spending money like there are no tomorrow. Having one beer, another one and another one. Now it’s drunk and don’t want to lose the edge, the steam and the good feeling of tipsy. The state doesn’t want to get the hangover and deal with the cure. They just want to shug more bottles and hope no one notice. Peace.

Reference:

Uganda Media Centre – ‘Statement on the proposed government borrowing of UGX 700 billion #UGCabinetResolutions’ (20.02.2018) link: https://ugandamediacentreblog.wordpress.com/2018/02/20/statement-on-the-proposed-government-borrowing-of-ugx-700-billion-ugcabinetresolutions/

PTA Bank Loan Scandal: US$200m gone missing, you don’t loose that amount money, you spend it!

The government has announced plans to borrow US$200m from the Eastern and Southern African Trade and Development Bank (known as the PTA Bank)” (…) “It will, however, do little to ease the near-term pressures. The weak currency is pushing up the cost of external debt (the new PTA Bank loan will add to the burden of US dollar-denominated debt), while high interest rates are driving up yields on domestic securities. The government originally budgeted USh172bn to service external debt in the current 2015/16 fiscal year and USh4.8trn for domestic debt, but the actual outlays will exceed this” (The Economist, 2015).

In today’s exchange rate the loaned planned would be 727,749,571,653.20 Uganda Shillings, or UGX 727bn. So that means that the Minister of Finance Matia Kasaija cannot find the documentation for a huge amount of money. This isn’t a lost pocket or recite, this is like loosing bank. However, we know the context, the loans that came from PTA came within months of the General Election and the Campaigns. Therefore, we can imagine where the money has gone. That is just speculation, but National Medical Stores (NMS) has given some signs, that the PTA Loans was not for them.

In June 2017, the Public Notice of NMS said this:

This funding facility was the PTA Bank loan, which was later approved by Parliament on 26th April 2016. The record on the Hansard clearly indicates ugx. 68billion required to avert an impending crisis at NMS as one of the primary reasons why the loan “should be urgently” approved. If NMS was therefore not meant to get the ugx. 68billion as additional funds, then the Ministry of Finance, Planning

and Economic Development misled Parliament” (…) “NMS provided the contracts by a letter

dated 13th September 2016, and waited for disbursement of the money from PTA Bank. However the said funds have to-date not been provided. This fact was brought to the Ministry of Health and the Permanent Secretary/ Secretary to the Treasury on 27th March 2017. It is important to note that the PTA Bank Loan, was approved by Parliament on the understanding that part of the Proceeds would go to NMS to cover the sh.68billion deficit” (…) “We wish to restate that if this money is not provided, over and above the Budget for FY 2017/18, all Health Centre IIs, IIIs and IVs, including those of UPDF, Uganda Police and Uganda Prisons, shall not receive Medicines in the FY 17/18 except ARVs, Vaccines, ACTs and TB medicines” (NMS, 2017).

Although documents indicate that PTA Bank released the loan basing on documents submitted by the agencies, it was never remitted to them accordance with the agreed terms of the funding. Last week while requesting for a supplementary budget for NMS, Finance State Minister David Bahati was put to task to explain why NMS lacks funds to procure medicines yet the funders released the money in November last year. MP Cecilia Ogwal (Dokolo) wondered why NMS was going through a financial crisis when Parliament approved a loan request of $200m. During the meeting yesterday, members put Bank of Uganda officials led by the Governor Tumusiime Mutebile to task to explain whether the loan was released from the funders to the respective recipients. Mutebile told the committee that between October20th 2016 and May 23, 2017; BOU received $97.9m from PTA bank and transferred all the money to the Ministry of Finance Consolidated Account as instructed by the Ministry of Finance. “How it was used, is the ministry of finance to explain,” he said” (Karugaba, 2017).

So just part of the loans that trusted to NMS never came and never was delivered. The amount of funds needed the crisis in the NMS was not given. Therefore, the lack of oversight of the funds and the loans was evident even last year. Still, PTA Loan of 2016 has not been honored. The BoU will explain what happen after the money was released. So, it means that the documentation of receiving it is there, but what happen after is now gone. The NMS are clear, the BoU, but not the Ministry of Finance, Planning and Economic Development (MoFPED).

Just to put the loan in more perspective, even the World Bank described there in January 2017:

Uncertainties related to both local and external events, including the freezing of new loans by the World Bank and the impact of the results of the Brexit referendum and the US presidential election being the most significant causes of this uncertainty. This is notwithstanding the fact that the Government has contracted balance of payments support credit from PTA Bank to provide the BoU with sufficient resources to prevent spikes in the foreign exchange market when the need arises” (World Bank, P: 11, 2017).

However something that is striking is the Letter of intent written by BoU Governor Tumusiime Mutebile and Minister of Finance, Planning and Economic Development Kasaija. Who both prepared a statement, to build trust in the economy and the loans made by the government.

Who wrote this this to IMF on 18th May 2016:

Government requested a line of credit of USD 200 million from the Eastern and Southern African Trade and Development Bank (PTA Bank). The three year revolving facility has terms that are deemed more beneficial than those prevailing in the domestic markets at the current juncture and near future, so we plan to use these resources in FY2016/17 and FY 2017/18 to finance our deficits. Therefore, these resources will replace existing, more costly domestic financing, rather than expanding the available envelope. We will not use the loan in FY2015/16” (Kasaija & Tumusiime Mutebile, P: 6-7, 2016).

While this story started after Public Accounts Committee in the Daily Monitor this:

Two of the most prominent Banyakigezi – Bank of Uganda Governor Tumusiime Mutebile, secretary to the Treasury Keith Muhakanizi and other top officials in the Finance hierarchy are set to answer questions over how Shs340 billion of Shs720b ($200m) loan meant for medicines and rural electrification was used. They are going to be quizzed by Parliament’s Public Accounts Committee (PAC) with the vice chairman Gerald Karuhanga saying that Muhakanizi, Mutebile, Auditor General John Muwanga and Mr. Lawrence Semakula, the acting Accountant General have been summoned to appear before MPs on Wednesdays to “explain the whereabouts of the money because no agency has received anything.” Mr. Muhakanizi called the probe ‘misdirected’ because ‘everything was done properly and I will prove that with documents.’ He said the money was pooled into the consolidated Fund and spent on approved expenditures” (Daily Monitor, 05.07.2017).

On the 13th June 2017, Treasury Secretary Keith Muhakanizi tried to explain where the money went:

As explained above, all the funds disbursed from the PTA Bank Loan have been fully accounted for. ii No funds has been lost as the Monitor Newspaper has alleged. iii I thank the PTA Bank for quickly providing the funds to the Uganda government when needed. iv It is, therefore, professionally unacceptable for Monitor Newspaper which has represented at the meeting of PAC in Parliament on Wednesday 7th June 2017, to have published an incorrect story in its editorial of 11th June 2017” (New Vision, 2017).

However, the story is not ended in last year. The PTA Loan continue to haunt the MoFPED and the BoU. They both have answers to give. Now a few months later. The answer from MoFPED are differently. Because the Treasury suddenly promised documents in June 2017. However, we are in February 2018 and still not there. Even his own defense that was a notice in the New Vision. Now a half year later, we see the same story and the same issue in the Parliament. That the same amount of monies are not accounted for. The same actors are trying to defend it. The whole affair smells not like Teen-Spirit, but more of State House affair. Since, they are trying to defend the misuse of funds and loans in the timeline of Campaigning. That is what it seems. Since suddenly during campaigns and such the needs for funds is there. Paying off political parties and loyal commissioners. There are so many things to buy and needs. So much material, buses, t-shirts and bribes. You have to print massive amounts of money. In a way where the State House also always needs bigger Supplementary Budgets after the General Election of 2016.

Here is the movement today:

Mr Kasaija yesterday failed to present a personal statement detailing what went wrong with the loan but maintained that no money was “stolen” as he fought to save his job.“I request that we should give an opportunity to a government authority to find out where this money went. But I want to give assurances to this House that no money was diverted or stolen,” Mr Kasaija said. With the loan approved only after the Finance ministry changed its labelling, Speaker Rebecca Kadaga last evening ruled that she will today make a decision regarding the fate of the report, with the duos fate set to be decided today. “I may not talk much but I had engagements with Ministry of Finance over that money. I had engagements to remind the ministry that that money was partially borrowed for NMS. I had meetings in my office over that money,” Ms Kadaga ruled. The loan put the Executive and Parliament at loggerheads with the Speaker at some point ordering the Rules Committee to investigate Mr Kasaija over contempt of Parliament as the fallout escalated” (Arinaitwe, 2018).

So still to this day there is no proof of where it went. Even if the trail leads to two familiar faces, the MoFPED Kasaija and Treasury Muhakanizi, who both trying to save faces. This all seems like misused funds from the Consolidated Funds for Campaigning. Since it was not used for the Rural Electrification Funds or the NMS. Who was both in dire needs, but not important enough. The NMS has lacked it anyways, and not gotten the needed medicine.

Therefore, the two financial heavy-weights has to either forge the paper-trial, since the NMS and the other agencies hasn’t received the funds. They have been spent elsewhere. Suddenly missing and that Muhakanizi uses so long time, that from June 2017 to February 2018 is unbelievable. If you use that long time proving parliament where the funds went. You know there are some shady misuse of it. It has gone to all sorts of activity, to tear-gas, paying police officers to keep Besigye under house arrest and whatnot. Because it didn’t go the place where the MoFPED and BoU promised.

This the GAVI Funds and CHOGM scandal all over again. This isn’t new, it is just PTA Bank loan gone missing. You miss a shilling, you miss a book or even some keys. But you do not loose this amount of money. They have gone to a growing patronage and securing the President’s Private Plane or something. Peace.

Reference:

Arinaitwe, Solomon – ‘MPs plot to censure Kasaija over Shs700b’ (07.02.2018) link: http://www.monitor.co.ug/News/National/MPs-plot-censure-Kasaija-over-Shs700b-/688334-4294524-r1k3ls/index.html

The Economist – Intelligence Unit – ‘ Loan secured from regional bank’ (11.12.2015) link: http://country.eiu.com/article.aspx?articleid=63762990&Country=Uganda&topic=Economy&subtopic=Forecast&subsubtopic=Fiscal+policy+outlook&u=1&pid=923837876&oid=923837876&uid=1

Karubaga, Mary – ‘Finance makes U-turn on sh150b NMS loan’ (08.07.2017) link: https://www.newvision.co.ug/new_vision/news/1455202/finance-makes-sh150b-nms-loan

Kasaija, Matia & Prof. Emmanuel Tumusiime Mutebile – ‘Uganda: Letter of Intent, Memorandum of Economic Financial Policies, and Technical Memorandum of Understanding’ (18.05.2016) link:

NMS – ‘CLARIFICATION ON FUNDS RELEASED TO NATIONAL MEDICAL STORES (NMS) FOR PROCUREMENT, STORAGE AND DISTRIBUTION OF ESSENTIAL MEDICINES AND HEALTH SUPPLIES (EMHS)’ (16.07.2017) link: https://www.nms.go.ug/jdownloads/Press/NMS%20Full%20pg%202017.pdf

New Vision – ‘Clarification on Allegations that US$200 million meant to procure medicines for health centres and implement Rural Electrification Projects Went Missing’ (17.07.2017) link: https://www.newvision.co.ug/digital_assets/fa485f48-5a96-4b7b-be1a-3969e7a45cc3/9-Min-of-finance.pdf

World Bank – ‘Uganda Economic Update 8th Edition, january 2017 – Step by step Let’s solve the finance puzzle to accelerate growth and shared prosperity’ (January 2017) link: http://documents.worldbank.org/curated/en/662191486394023103/pdf/112621-WP-P161699-PUBLIC-UEU-8TH-edition-final-for-web.pdf

The NRM continues their evil financial circle, as the state debt grows to 31.2% in the FY 2018/19!

The National Resistance Movement (NRM) have over created a growing the debt. This meaning parts of the Financial Year of 2018/2019 is directly going to repay debt. NRM Regime is clearly paying more and more on the debt, than what they are paying for government services and also interest payment. The citizens of Uganda should be worried about how the NRM is projecting and using their funds, how they are adding debts to pay old debts. They are really disrespecting the wise people and the Republic. Since, they are over the time, not making the economy more healthy, but making it more sick. The signs has been there the last few years, as they are projecting petroleum profits. Even before it hits the ground running. It is worrying, that they are showing it this month in the numbers from the Parliamentary Budget Office.

The Present Value of public sector debt to GDP stood at 27.1 percent in FY 2016/17 and is projected to increase to 31.2 percent in FY 2017/18 below the thresholds of 50 percent stipulated in the Charter of Fiscal Responsibility” (Parliamentary Budget Office, P: 2, 2018).

If you wouldn’t worry that the debt in the public sector rises with 4.1 percent in one year. I don’t care about the charter. When a state is able to make it rise with 4.1 percent in budget year, it shows that the economy is not fiscal responsible, neither healthy. It’s like continue to super-size burgers, when you already fat and having high blood-pressure. It will weaken the system with the continued eating of the super-sized burgers, instead of trying to find a healthy diet. Which will change the blood-pressure and how the body will feel with a balanced diet. However, when it comes to economy, the NRM doesn’t believe this.

Domestic refinancing (borrowing to finance domestic debt) will account for 22 percent of total domestic resources” (…) “Domestic borrowing for purposes of financing the deficit is projected to

amount to UGX 939.9 billion” (…) “Project support will account for 97 percent of the total external resources while budget support will account 3 percent (from the World Bank and part of the PTA loan)” (Parliamentary Budget Office, P: 4, 2018). “Interest Payment projections include UGX 2,279bn for domestic securities (Treasury bills and bonds) and UGX 422bn for interest on external debt” (Parliamentary Budget Office, P: 5, 2018).

This here shows how the state is financing the debt and the repayment. Also how high they are pushing the domestic resources to repay domestic debt. This is clearly hitting the economy hard, when so big parts of the budget and resources is spent on repaying debt. This is all destroying the possibilities, since its taken a giant slice of the budget and using it on debts instead of paying salaries of teachers and civil servants.

This are the numbers, that people should take to heart. Because this debt and the rising debt is eating the budgets. The state is making it grow and is not containing it. That should worry anyone. Especially, the NRM who is in-charge and the President who has created this avenue and has to make sure this get payed. Peace.

Reference:

Parliamentary Budget Office – ‘INDICATIVE BUDGET AT A GLANCE – FY 2018/19’ (January 2018)

The Uganda Budget Framework Paper for FY2018/19 signals growing debt and steady growth of interest repayments!

I will go over key points of the National Budget Framework Paper of Financial Year 2018/19 – FY 2022-23, that the Ministry of Finance, Planning and Economic Development released at the end of last year on December 2017. MoFPED or Minister of Finance Matia Kasaijja must surely flatter himself with this release. As the numbers and troubles ahead has to be meet with swift action. That the National Resistance Movement (NRM) and President Yoweri Kaguta Museveni should answer for the consequences their economic policies has affected the financial stability and fiscal responsibility.

On page seven of the paper, it was said this:

i) Low revenue to GDP ratio, poor planning and budgeting due to non-adherence to Sector Investment Plans and increasing trends in supplementary pressures; ii) Lack of inter and intra sectoral coordination and increased cost of public administration resulting from creation of Authorities, Universities, Districts and related Administrative Units. iii) Accumulation of domestic arrears, arising majorly from court awards and delayed payment to the private sector that supply Government; and, iv) Low budget absorption especially for infrastructure projects resulting from delayed acquisition of right of way for projects and lengthy procurement processes” (MoFPED, P: 7, 2017).

If this isn’t signs of trouble ahead and lack of control of the economy, nothing is. When the government has trouble paying their dues, when they cannot absorb needed budgeted funds and also create longer procurement processes, while there is poor planning and lack of cooperation between different parts of the government and institutions. Therefore, the basic cost of developing projects and day-to-day services will be more costly, while the misuse of funds will grow. That is not the good steady progress, the ruling government promised in recent elections or anytime else for that matter in the reign of Museveni.

As the scale of debt has been on the rise of different years. The paper is clearly signaling bad news as well: “Amortization of external debt is projected at US$ 236.5 million, equivalent to Shs 894 billion in FY2018/19, which is relatively high compared to past levels because of repayment of the PTA loan. Thereafter, external debt amortization is projected to reduce to US$ 131.8 million in FY 2019/20” (…) “Government‟s interest payments are projected at Shs 2,701 billion in FY2018/19, of which Shs 2,279 billion is interest on domestic securities (Treasury bills and bonds) and the rest is interest on external debt. Interest payments constitute 9.8 percent of total resources available for spending next financial year. The figure is projected to rise to Shs. 2,788 billion in FY 2020/21 and will amount to Shs. 3084 billion during FY2021/22. A great percentage of interest payments about 84 percent is domestic interest payments which partly reflects high cost of domestic borrowing” (…) “Total government expenditure and net lending (excluding debt refinancing) will amount to Shs 22,520 billion in FY2018/19 and further increase to Shs 25,059 billion in FY2019/20. The bulk of this expenditure (10.5percent) is largely on account of increase in development spending arising from the scale up of public investments by Government. However, moving forward the implementation of the infrastructure projects will be more gradual to ensure consistency with the requirements to meet the EAMU convergence criteria. Recurrent expenditure is projected to increase by Shs. 166 billion during FY 2018/19 mainly driven by an increase in domestic interest payments” (MoFPED, P: 13, 2017).

That this combined with the early signs of worrying of procurement process, bad collective effort of ministries and also growing debt. None of this is a well-made government to secure services and institutions to serve the public. Clearly, there are other outlines and worries, since none of the early pages of the paper are too hopeful. These numbers has been shown before, but the MoFPED are really not hiding the fact, that the growing debt and services of it is taking a bulk of the budget this year.

As in previous years, the State House and Office of the President are getting big chunks of the budget. In the coming financial year the State House total budgeted funds are in the massive amount of UGX. 265,342 billion shillings and the Office of the President gets the amount of UGX. 56,436 billion shillings.

Will look more into that, when I get the hold of the Budget Framework paper directly made for that part of government. Since it is always showing some inspiring expenditure, if it is expensive water or spending on bad seeds for Operation Wealth Creation (OWC). That depends on what excuse the President and NRM needs to overspend on the majesty for life.

More will come later. Peace.

The 10th Parliament today adds more debt to the state, near 2 trillion shillings more actually!

Today, the Ugandan Parliament has added more debt to the state since they cannot get grants or donors to fund their projects like in the past. National Resistance Movement (NRM) have the majority of the Parliament, therefore the adjustment and the possible questioning of the bills today. Would be squashed briefly, as the new amount of debt will arise and the state has to get more sufficient funds to repay the loans and the rising interests. That the three projects might bring profits in the future and could be seen as positive development, might be true, but it is a high risk. When the levels of debt already has grown as much as it is.

The first loan approved by the parliament was to borrow for the Lake Victoria Maritime Communication and Transport Project. That loan is up to $ 14,4 Million USD or 52,409 billion Uganda Shillings.

The second loan approved by the parliament was to borrow for the upgrade the road Kapchorwa-Suam-Kitale Road. These was two loans in one. Which is one $ 38,349,313.28 or 139,705 billion Uganda Shillings, this was borrowed from African Development Bank (ADB). The other was $ 56,129,597.12 or 204,437 billion Uganda Shillings from the African Development Fund (ADF).

The third loan was in Euros, first part from UK Export Finance (UKEF), which was EUROS 270,266,042.15, converted to US Dollars is $ 321,199,210.23 or in Uganda Shilling the total: 1,170,081,708,10 Uganda Shillings or in word One Trillion One Hundred Seventy billion Uganda Shilling. The second loan are in EUROS 37,110,585 from Standard Chartered Bank, converted to US Dollars is $ 44,112,060.75 or in Uganda Shillings 160,670,761,044.55 or in words One Hundred Sixty Billion, six hundred seventy million, seven hundred sixty-one thousand, forty-four and fifty-five hundredths Uganda Shillings.

So collectively today, the NRM has accepted loans which totals $ 474,190,180 US Dollars. In Uganda shilling it means 1,727,264,129,950.40 Uganda Shillings. In words it is one trillion, seven hundred twenty-seven billion, two hundred sixty-four million, one hundred twenty-nine thousand Uganda Shillings.

The budget of 2017-2018 was in total 29 Trillion Shillings. Therefore, they are now seeking to borrowing close to 2 Trillion Shillings, which is of last years budget close to 2,9 %. So the NRM MPs and State has had no trouble borrowing close to 3 percentage of previous budget on three infrastructure projects. It is evident and should be worrying with the knowledge that the state is already using 33 % of the budget to repay loans of old and their interests. No matter how positive these projects are and what they can accumulate in the future. Still, the basis of loaning this amounts while having growing debts already. Is really tasking future generations to pay for the loans of the previous ones.

So it seems like the NRM are planning to opening the gates and making sure the state owns more to even more banking and international money lenders. As if the petroleum dollars will safe the deficit in the future. As the interests and the downgrading of the state might appear. Unless, the state gets higher oil prices and some luck. Since, the NRM have really forked itself and hoping someone will bail it out. Peace.

Post Navigation

%d bloggers like this: