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Archive for the tag “Emmanuel Tumusiime-Mutebile”

IMF statement on Uganda’s current Economic framework has a “grey” list, but a steady core inflation!

The International Monetary funds have concluded yet another visit to Uganda. As todays statement and insights to the economy is dim. There is not much prospects or much goodness to take out of it. Unless, you are thinking to invest while the inflations are rising and hoping it does not stop. Even though the needless to say, it has been like this before after General Elections in Uganda. That the economy has suffered a blow and a shock, which has hurt the economy and food prices. Therefore, sparked demonstrations and uprisings, like that last big one in Walk to Work and Activist for Change in 2011. It is clearly on the same path, but just in 2017 instead. President Yoweri Museveni likes to repeat himself!

“Inflation has edged up, mainly reflecting the effects of the drought. Food price inflation rose from 5 percent year-on-year in September 2016 to 22 percent in April 2017. With this, headline inflation recorded 6.8 in April 2017. Core inflation stood at 4.9 percent, in line with the Bank of Uganda’s (BoU’s) 5 percent target” (IMF, 2017). These numbers are showing the decline and increase of common commodities, even if the Core Inflation is around the estimated level; the food prices are showing the problems in the economy in general.

“The authorities have made some progress on structural reforms. Two structural benchmarks have been met on time, three with delay, and the remaining five are pending. Most notably, the authorities moved forward the legislative agenda that will support Uganda’s exit from the Financial Action Task Force “grey” list—the laws now await President Museveni’s assent. The Ministry of Finance, Planning, and Economic Development published reconciled reports on the stock of outstanding arrears at end-June 2016 (3.2 percent of GDP). Pending reforms include sending the BoU Act Amendments to Parliament, publishing the report on end-December unpaid bills, and sending to cabinet a policy for regulating mobile money” (IMF, 2017). The GoU and President Museveni have not complied totally and made laws objectively transparent. Therefore, there are laws awaiting the approval and be requested to Parliament, as the state reserves and budgets are still enforced with the will of the President. In addition, a proof of the maladministration is the amount of budget arrears that was in last budget year, which will hit the economy, as the bills have to be paid this year.

“Uganda’s external position is broadly consistent with fundamentals and desirable policies in 2016. The current account deficit is projected to temporarily increase over the next 5 years as infrastructure and oil sector investment ramp up further. Achieving the envisaged growth dividend of these investments is essential to maintaining external stability—just as for public debt sustainability. International reserves at end-December 2016 stood at US$3 billion (5¼ months of next year’s imports), above the adequacy level suggested by the IMF’s metric for credit-constrained economies. Going forward, the BoU can purchase reserves opportunistically and would meet the EAC convergence criterion of 4½ months of imports. The flexible exchange rate regime is serving Uganda well” (IMF, 2017). Therefore, the government and IMF envisions that the future prospects of oil monies will be sustainable for the current loans into infrastructure projects. It even envision it and with that will ensure external stability and trust into the economic climate of Uganda, that shows that the trust in future gains is the ones; that makes people have faith in the Ugandan economy.

This is all here proof in stated language that the IMF are looking through the budgets and their laws. Nevertheless, is not addressing the trillions shillings suddenly disappearing, neither the Presidential Handshake, as these are just figment of imagination for the foreign economic advisors. They just do not see it or does not want to see it. Peace.

Reference:

IMF – ‘Uganda: Staff Concluding Statement of the 2017 Article IV Consultation Mission and Discussions for the 8th Review under the Policy Support Instrument’ (16.05.2017) link: http://www.imf-fmi.africa-newsroom.com/press/uganda-staff-concluding-statement-of-the-2017-article-iv-consultation-mission-and-discussions-for-the-8th-review-under-the-policy-support-instrument?lang=en

Uganda: Civil Society Position on Tax Revenue Measures for FY 2017/18 (21.04.2017)

Report from the MoFPED shows the growing Ugandan debt by June 2016!

Again, the Ministry of Finance, Planning and Economic Development (MoFPED) dropped another report on the fiscal policies and the fiscal health of the economy in Uganda. The National Resistance Movement (NRM) have created this environment as the growing debt and growing interest payment comes with their planned debt rise. Still, the PriceWaterhouseCoopers spelled gloom earlier in the year, as this report was dropped on the MoFPED web page today. Even if the Report was spelled out in December 2016. It is if like the NRM didn’t want this to spelled out early. Since the numbers aren’t compelling of an arts piece, more issues… just take a look!

The stock of total public debt grew from US$ 7.2 billion at the end of June 2015 to US$ 8.4 billion in June 2016. This represents an increase from 30.6% of GDP to 33.8% over the two periods. The increase was largely on account of external debt, which grew from US$ 4.4 billion to US$ 5.2 billion over the period. Domestic debt increased from US$ 2.8 billion to US$ 3.2 billion” (MoFPED, P:V, 2016).

That the debt are growing quick, as the public debt grew with US$ 1.2 billion, that the percentage of GDP went up with 3,2%, the external debt rose with US$ 0.8 billion and the Domestic debt went up US$ 0.4 billion. All of these numbers show the amount of monies that the Government are adding on their debt, as the UNRA and the development projects are suspended by World Bank. So the Infrastructure development can be questioned as the growing debt, as the government must have other uses of the growing and scaled up debt. Since the transparency of the economy isn’t there and that the sanctioned bills comes from the State House. Just look at the growing interest rates as well.

Interest Payment as a percentage of GDP stood at 2.2% as at end June 2016, up from 1.9% as at June 2015. The increase is largely explained by interest payments on domestic debt, which grew from Shs 1,077 billion in FY2014/15 to 1,470 billion in FY2015/16. There was a significant increase in the weighted average interest rate of Government debt; from 5.9% to 6.5% in June 2015/16. This followed increases in the weighted interest rates for both domestic and external debt, from 13.6% to 15.3% for domestic debt and from 0.9% to 1.2% external debt. As interest rates increase, so do the debt service obligations of Government” (MoFPED, P: 4, 2016).

The difference between June 2015 and June 2016 the percentage has grown with 0.3%, the domestic interest rate grew with Shs. 0.393 billion. The Interest rate alone went up by percentage 0.6%, as the weighted interest rates went up 1.7%. The key sentence that the report wrote and I repeat: “As interest rates increase, so do the debt service obligations of Government”.

That idea isn’t only on the interest payment percentages are running higher, but as the debt goes up, the interests goes up. So the Debt Service Obligations are going up for the Government. This is a natural outcome, that the obligations for the state goes up with the amount of debt it rises. So the government can try to portray this is controlled, and to one extent it is under control. Still, the growth in this regard proves that the NRM regime are pilling up debt and increasing their debt, as well as interests. In the end this will make the state worse. Especially knowing that the energy dams have been built poorly and many of the expensive roads haven been fruitful. This is development that the growing debt is being used to…

So the NRM regime and the Ugandan government isn’t believable… the rise of debt and interests show’s the current state of affairs. Even if the percentage is after plan, the government still has to take charge and make sure they can pay back both the debt and interests. Peace.

Reference:

Ministry of Finance, Planning and Economic Development (MoFPED) – ‘DEBT SUSTAINABILITY

ANALYSIS REPORT 2015/16’

Uganda: ICTAU “Re: SIM Card Registration Exercise” (13.04.2017)

Uganda: UPC Calls for Economic Reforms (05.04.2017)

Bank of Uganda: Change in Signature on Uganda Shilling Banknotes (17.02.2017)

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Bank of Uganda: Monetary Policy Statement for February 2017 (15.02.2016)

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PwC report spells gloom over rising debt in Uganda!

Ugandan shillings

A report released by PricewaterhouseCoopers limited has delivered this month is clearly seeing what others has seen with the economic situation and the use of funds by the National Resistance Movement (NRM) and their regime. This report by a company which is an international company who works with other businesses and civil society organizations who needs economic advice and advisory services for taxes and such; therefore the report from PwC on economic situation is telling. Their speciality on their outlook will be saying with auditors and financial analyst whose words means a lot. They are professional analysts in this field are writing and saying this on the economic climate. The Economic climate is worrying and that has been visible. The liability of the growing debt in the republic has been a hazard together with the lacking internal revenue for the state as well. Just take a look!

Sluggish economy with higher debt:

“This bulletin comes at a very crucial time for the Uganda economy when growth is slowing down, private sector credit is on a decline, consumer demand is low, implementation and execution of critical public infrastructure projects is very sluggish, and the public sector debt burden on the economy is at the highest it has ever been” (PwC, P: 3, 2017). “If the domestic revenues collections continue to underperform, the government will be forced to borrow more from the domestic market. The increase in government borrowing may result in a substantial increase in yields on government securities, which may result in an increase in borrowing rates, which may constrain the private sector credit growth even further” (PwC, P: 7, 2017).

Growing debt:

“The Uganda’s public debt burden has risen by 12.7% in the past four years from 25.9% of GDP in FY 2012/13, to 38.6% of GDP in FY 2016/17. The debt burden is projected to continue rising to 45% of GDP by 2020. Debt as a percentage of revenues has risen by 54% since 2012 and is expected to exceed 250% by 2018. The country’s ever increasing debt burden has resulted in a deterioration of the debt affordability situation” (PwC, P: 8, 2017). “Uganda’s capital expenditures are still too reliant on external finance. Currently debt servicing constitutes 11% of the total government expenditure, one of the highest debt burdens in sub-Saharan Africa. This is expected to increase to 16% of the total government expenditure by 2018. Uganda’s debt burden has risen faster than the government’s own resources, resulting in a debt-to-revenue ratio of 236%, one of the highest amongst B-rated countries. This has prompted Moody’s recent down grade of Uganda’s long-term bond rating by one notch to B2 from B1” (PwC, P: 8, 2017).

An Economy with challenges:

“2016 was an economically difficult year for Uganda. The economy faced numerous challenges due to the continued uncertainty surrounding the recovery in global economic growth, weak commodity prices and geopolitical events in our key trading partners. As a result, of these numerous challenges, our export earnings, FDI flows and remittances to Uganda all went down. These developments, together with a slowdown in the execution of public investment projects and weaker than expected private sector demand, had a major effect on the economy” (…) “Other internal risks include delays in the implementation of public infrastructure projects such as the Standard Gauge Railway (SGR) linking Uganda to its East African neighbours, and the key infrastructure projects critical for the commencement of oil production” (PwC, P: 4-5, 2017).

If you are worried by the Republic and their economy after this, than you haven’t followed the class since this signs have been there for while! The state of the economy is fragile and the debt rise should concern all the ones inside the Republic and also outside. However, this could change, but that has to be done by the government and steer in another direction as today. The greed and the common sense of developing the economy is forgotten, as they are fixated on infrastructure projects and oil developments, while borrowing to fill the losses of donor-aid and internal revenue. This could be done in many ways, but that would not be easy. Peace.

Reference:

PricewaterhouseCoopers Limited (PwC) – ‘Uganda Economic Outlook 2017’ (February 2017)

Public Notice: DFCU Bank Limited Takes over Crane Bank Limited (27.01.2017)

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IMF Executive Board Completes the Seventh Review Under the Policy Support Instrument for Uganda (11.01.2017)

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Uganda’s economy has performed reasonably well in a complex environment.

WASHINGTON D.C., United States of America, January 11, 2017 – On January 5, the Executive Board of the International Monetary Fund (IMF) completed the seventh review of Uganda’s economic program under the Policy Support Instrument (PSI).1 The Board’s decision was taken on a lapse of time basis.2 In completing the review, the Board granted a waiver of the nonobservance of the end-June 2016 assessment criterion on the overall deficit of the central government.

The PSI for Uganda was approved by the Board on June 28, 2013 (see Press Release No. 13/78), and a one-year extension was approved on June 6, 2016 (see Press Release No. 16/263).

Uganda’s economy has performed reasonably well in a complex environment. Growth slowed marginally to 4.8 percent in FY15/16, reflecting muted sentiment in an election year and adverse global and regional developments. The current account deficit improved by 1 percentage point to 5.9 percent of GDP, and the Shilling has stabilized after a sharp depreciation in 2015. Growth is projected to nudge up to 5 percent in FY16/17.

Program performance under the PSI has been mixed. Tight monetary policy in 2015 has helped contain inflation in the target range, and the Bank of Uganda (BoU) has started an easing cycle in April 2016. Reserve cover remains adequate. Fiscal revenue and deficit targets were missed, reflecting lower-than-expected growth and election effects. Investment spending fell short, while current expenditure overshot. Structural reforms have progressed, albeit with some delays.

The banking sector remains overall well capitalized, despite elevated non-performing loans. The BoU appropriately took over an undercapitalized bank and is identifying a strategic investor.

Uganda remains at a low risk of debt distress. The scaling-up of infrastructure investment implies a temporary increase in debt, putting a premium on domestic revenue mobilization and ensuring that public investment yields the intended growth dividend.

Looking ahead, priorities include close cooperation with the Financial Action Task Force to ensure Uganda’s swift exit from its “gray” list; strengthening domestic arrears monitoring; and amending the Bank of Uganda Act to reinforce central bank independence.

1 The PSI is an instrument of the IMF designed for countries that do not need balance of payments financial support. The PSI helps countries design effective economic programs that, once approved by the IMF’s Executive Board, signal to donors, multilateral development banks, and markets the Fund’s endorsement of a member’s policies (see imf.org/external/np/exr/facts/psi.htm). Details on Uganda’s current PSI are available at imf.org/uganda.

2 The Executive Board takes decisions without a meeting when it is agreed by the Board that a proposal can be considered without convening formal discussions.

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