Opinion: Museveni – “China might be a problem in the future” – it will be if you default on your debt

Africa has been having problems for the last 600 years due to the slave trade, colonialism, neocolonialism — and none of it was from China” (…) not seen any serious problem, because their approach is different” (…) “They do not impose their offers if you do not want them, so we have not seen a problem for now. Maybe a problem in the future, but not now” – President Yoweri Kaguta Museveni (Sinan Tavsan – ‘Uganda leader says China-style diplomacy ‘better than’ the West’s’ 17.03.2022, Asia Nikkei).

President Museveni had an exclusive interview with a journalist from Asia Nikkei and it was published today. These few quotes are from there and it is striking. The former donor darling of the West. The President who has pandered to the interests of the United States and their allies for ages. Who has eaten of the buffet of aid, grants and all sorts of prepositions, which has given him a larger than life persona.

That man is now blaming the West for if all. He is right in going after the colonial past of the West and the neocolonial structures, which are hampering development and continues the cycle of rich versus poor. This is justified, but he also shows a little nativity in concern to China.

It is just like he don’t think the monies, the funds and the China Exim Bank, which works like this:

The China Exim Bank is increasingly making use of a deal structure – known as the “Angola mode” or “resources for infrastructure” – whereby repayment of the loan for infrastructure development is made in terms of natural resources (for example, oil). While this approach is by no means novel or unique, and follows a long history of natural resource – based transactions in the oil industry – China has taken its implementation to a higher level. By providing preferred lines of credit to Chinese state-owned enterprises and foreign governments wishing to purchase Chinese made goods, the China Exim Bank supports the overseas expansion of Chinese firms in line with the country’s “Go Global” strategy, whose long-run goal is to increase the productivity and competitiveness of these enterprises vis-à-vis their global competitors. The arrangement is used for countries that cannot provide adequate financial guarantees to back their loan commitments and allows them to package natural resource exploitation and infrastructure development” (Institute of Developing Economies – Japan External Trade Organization (JETRO) – ‘China in Africa’ October 2009).

What Museveni is not saying is what the costs of the debt and the structure of the Chinese support to Uganda or anywhere else. It is like Museveni haven’t seen what has happened when Republics or Nations defaults or fail to pay on the debts. Since, the Chinese Banks or Funds are coming with strings, which isn’t always public. That’s why we have seen what has happened to Sri Lanka and Tonga, which both has to give up key infrastructure to be licensed. The same has been told to happen Zambia and there are already fear of what could happen to Entebbe International Airport.

President Museveni should consider all of this, as it is next generation that will cover the debt he has been accumulated during his reign. There will be more than the Toll Road on the Entebbe Express-way to secure revenue for the added debt. It is like Museveni isn’t concerned about this and the threshold for repayments are coming closer. Therefore, at one point or another… if there is lacking domestic revenue… the Chinese companies or China can cease or capture collateral.

So, Museveni is right… China could become a problem. Especially, for all the nations who has eaten loans for the infrastructure projects in the Belt Road Initiative (BRI), which will pass the grace period and the debt of these has to be repaid. It wasn’t free money to build roads, buildings or rail-roads. No, it was an investment, which the Chinese plans to get profits out of. They didn’t give away this money. The first loaned the money, got a Chinese developer and Chinese Engineering company to build it and now later the debtor has to repay it with interests.

That is the brutal truth… I am not saying the loans are a problem, but they could easily become it. Especially, if the debtor doesn’t pay on time or in a fashion, which the creditor accepts. If they defaults or fails to repay. This gives the creditor leverage and possible freedoms or liberties to ensure collateral. Therefore, it could easily become a huge problem…

Museveni should also study how this happened to others. As sooner or later, this could happen in Uganda or anywhere else in Africa. The Chinese is right in doing this. The debtors signed the agreements and the stipulations on the loans are giving it legal binding rights to get it repaid. That is why … they might not use colonial techniques to get resources, ownership or have influence. They just borrowed money and with that has the upper-hand of their poorer states. It is a wise move, because the Chinese knows greed is an easy way of corrupting minds and get them into the fold. The same ways happens here. They don’t come with guns or war, but they are financially binding, which can easily be triggered.

In this instance, Museveni is partly outsmarted. Both are getting their interests nurtured, but at one point he could easily get into real trouble. It would be a huge problem and the state has to find currency or liquidity to actually cough up funds to pay on old loans. This is on the horizon and evidently, people are speaking to soft-heartedly about it. Peace.

Chinese Embassy in Uganda: Remarks by the Spokesperson of the Chinese Embassy in Uganda on Some Media Reports Alleging that “Uganda Surrenders Airport for China Cash” (28.11.2021)

Opinion: Financial distress and defaulting on loans causes the state to loose Entebbe International Airport

China is most likely to take over Uganda’s Entebbe International Airport for default on debt repayment. More of Uganda’s national assets are at stake of seizure because of the unrealistic and endless borrowing which has mountained public debt to UGX65 trillion” (Kingdom Media Uganda, 25.11.2021).

The Deficit Financing can only take you so far. The bloated and crony capitalism can only keep you going so far. There been years upon years with loans for all sort of development projects and infrastructure upgrades in general. The loans have gone to buildings, roads and the only international airport in the Republic.

The National Resistance Movement and President Yoweri Kaguta Museveni have over the years promised they have a threshold and control of the amount of debt. However, in 2021 after a downturn and lack of generating revenue. The state is defaulting on it’s loans. The state has taken out loans it cannot carry. Loans are not only the loan, but the services for it too. The loans are with interests and with additional fees, which was accepted on taking the loans. These loans are now maturing and the grace period of not paying interests etc.

The Ministry of Finance, Planning and Economic Development (MoFPED) have promised they can service it and has it under control. They have said it would be used properly and well-spent funds. Nevertheless, the loans are clearly piling up and the state doesn’t have the revenue to pay them. They have recycled to many bad-loans and now they comes to haunt the Republic.

The state is paying for ghosts, huge patronage and a local government structure that is dilapidated from the get-go. Since, the state has such excess of expenditure, but they have to keep that to breathe life into the regime. This is why the state has to spend and use funds like a drunk sailors in port. Just awaiting to be robbed by a bystander or waste a salary at a gentleman’s club. However, this is a serious government and not a drunk lonely man who has been at sea for months on end.

It is tragic, but there been warnings. The Sri Lankan debt to China and what happened there should have been a “red flag”. What happened in Zambia as well should be another story of which the Ugandan government should have reacted too. However, that is clearly asking to much, as kickbacks, graft and grand corruption is part of the diet at the Entebbe/Nakasero State House. They are just eating and doesn’t care about the ramifications of it. Since, the cattle in Rwakitura farm is better taken care off, than how the budgets are financed. This is the sad reality of the Republic in 2021.

The amount of loans and debt will cause more distress. Why? Well, there is no future or ability to clear the debt without any proper revenue. The state needs to find new measures to get fiscal responsible. However, the state cannot just tax things and start to tax people for their every transaction. Because, with doing that… they are taking away money, which will generate more revenue and even more possibility to create new businesses. Yes, the state gets more taxes, but they are also creating a wormhole where there is no option to generate any real income. Since, if you have any transactions, the percentages of money is siphoned by the state and instead of getting invested to make new markets.

Therefore, the state is forced to change the way it operates. However, by doing so… the NRM and Museveni will have to drop cronies. That is something it cannot afford, because they are to eat and not to make the Republic better. This state cannot sustain itself …. and it’s own fault that it defaults on loans. Nevertheless, the citizens and the taxpayers are the first to be hit by this. Not the ones who has issued or taken out the loans over the years. They are the ones that has to fix it or for generations pay the Chinese for ordinary services. Because, the current regime wants SUVs and envelopes to cover for funerals or pay for medical tourism. Peace.

Opinion: 7 years down the line and the China Exim Bank loan to upgrade Entebbe Airport can become a liability

The State Minister of Finance, David Bahati assured the legislators that the implementation of the project will be monitored to ensure the funds are properly utilised” (The Observer – ‘Parliament endorses Shs 680bn Entebbe Airport expansion loan’ 30.10.2015).

It is now evident that the Government of Uganda and the National Resistance Movement (NRM) might struggle with a loan it took out in March 2015 from the China EximBank to fund upgrades of the Entebbe International Airport. We are now in October 2021. There was forewarnings about taking expensive and extensive loans to build and development infrastructure projects. The ones who was steadfast and worried about the rate of loans the state took out was silenced. The state had a plan and initiated with thresholds of loans the state could borrow.

Alas, the state is starting to struggle to cope with all of these loans. It is not shocking as the NRM and the state have been busy with deficit financing it’s budgets to balance it. They are operating with a higher expenses than it has domestic revenue. So to go from red to black the state borrows vast sums from various entities, both locally and internationally. These are taken out with interests and with that… the debt burden is ballooned and at one point… the creditor will either ask for the collateral or make an agreement to cover the funds to cover the defaulted debt. This is what that could happen to Entebbe International Airport…..

Here is how the story went…

How the loan was made:

On October 8, 2014, Uganda’s Civil Aviation Authority (CAA) and China Communications Construction Company (CCCC) entered into a contract for the up grading and expansion of Entebbe International Airport (Phase 1). To access funding for the project, the Government of Uganda (GoU), represented by the finance ministry, signed a concessional agreement with EXIM Bank of China dated March 31, 2015 for the principal amount not exceeding Renminbi 1.26 billion (about $200m) and interest to be charged at a rate of 2% per annum” (Africa Tembelea – ‘AG Muwanga raises queries on Entebbe Airport Expansion’ 12.01.2019).

How CAA looked at the agreement in 2019:

Current overall progress for the upgrade and expansion of Entebbe International Airport is at 52 per cent as opposed to the planned progress of 55 per cent. This is commendable progress. At one point in time, there was a delay in release of money from the Exim Bank of China to the contractor (CCCC), which led to a slight delay that has since been resolved. There was a difference of opinion between Exim Bank and the Government of Uganda on the loan agreement clauses. This necessitated the Government of Uganda and Exim bank of China to renegotiate the terms. This was done and the matter resolved amicably. The contractor has since increased resources committed to the project including manpower and equipment. The rainy season also affected works” ( Dorothy Nakaweesi – ‘Renegotiating loan terms slows Entebbe Airport expansion’ 03.06.2019, Daily Monitor).

Xinhua reports:

Under the Belt and Road Initiative, construction works started in May 2016 after Uganda acquired a 200-million-U.S. dollar loan from the Export-Import Bank of China (China EximBank). The project is scheduled to be implemented in two phases, said China Communications Construction Company (CCCC), which was contracted to design, construct and manage the project. The first phase, with three-quarters finished, involves construction of a new passenger terminal, a new cargo complex, and upgrade of two runways and their associated taxiways, rehabilitation and overlay of three aprons. “For the new cargo building, it is about 10,000 square-meters and when it is finished, it can handle 100,000 tons of cargo per year; for the new passenger terminal building, it is about 20,000 square-meters (and) can handle 3 million passengers per year,” Li Qinpu, CCCC project manager told Xinhua in a recent interview” (Ronald Ssekandi – ‘Feature: China revitalizes Uganda’s aging airport to carry more int’l traffic’ 15.10.2021, Xinhua).

Brian Luwanga tweeted today:

EXIM Bank of China can take over Entebbe Airport in case Uganda fails to pay back a loan of 740 billion shillings ,this has been unearthed by COSASE while meeting Finance Minister Matia Kasaija. The loan was advanced to Uganda for upgrade of Entebbe Airport(Brian Luwanga, 28.10.2021).

It is now a shot that the state promised was safe and would be able to liable for. The state said it would be able to repay the Chine EximBank and service the debt. However, it now seems likely the state is failing to pay back the loans. This means the state is defaulting in it and depending on the agreement. The creditor will have power to cover the debt from the debtor. In this instance, the state has to give collateral or any other sort of value, which will practically cover the lost debt and get returns on the loans issued.

This here is a sad story, but they could have done things differently. Even MPs and some said the state should use other sources to raise the funds for the upgrades of Entebbe International Airport. There was one MP who said the state should borrow this from the NSSF to cover it. Alas, that wasn’t the case and now we are here.

We shouldn’t be shocked at this current rate and with the trillions of shillings of debt. The debt isn’t only the amount you get directly from the lender, but you will also pay additional fees and interests. Meaning the loan isn’t just the fixed funds, which the debtor is receiving, but also the costs of servicing it too. That is what the state has do to when it takes these sort of loans and financial instruments.

The general public should worry about this. Because the state has taken out so many loans and these could it easily default on. The state needs domestic revenue, but is running on huge burden of running costs. While it doesn’t have a growing economy or financial structure to cover the deficits. That’s why the state has taken out loans to cover these expenses and this is why they are defaulting on it.

This was inevitable and the state has to restructure itself. Also, ensure it only has expenses that it can cover and just continue to add debt until the sky. Now the rainy days are coming and the loans taken out in recent years will come to haunt the state. This will hurt the state even more and the spiral of depreciative loans will eat up the budgets, which it is already doing. The rate of paying down on it will be destructive, unless there is a sudden miraculous change of financial fortunes. Alas, await more tragedies like these, as the Entebbe International Airport is the top of the ice-berg. Peace.

#BesigyeReturns and the Calvary goes into panic mode!

upf-03-10-2016

“Police is not going to allow any activity that is going to disrupt normal activity in the city. FDC didn’t communicate changes regarding Kizza Besigye’s return. We expected him on September 29,” police spokesperson Andrew Felix Kaweesi on FDC’s planned procession to welcome the leading opposition figure” (NBS TV Uganda,2016).

It’s ironic that the Police Spokesman and that the Authorities has questions towards normal activity as of just hours ago the Kampala we’re busy with the KCCA sponsored Carneval where Dr. Jennifer Musisi drove a expensive Mercedes and the different sponsors had tents and concerts while the Kampala we’re decorated for festivities and other acts that the Police accepted, but that FDC and Besigye planning something is “disrupting normal activity” which means disrupting the embezzlement and power of the people like the regime does daily. Well, here is my reports and quotes from what happen on this day!

Just as the roads to the Entebbe International Airport we’re closed with roadblocks to close off the Airport as the Kenya Airways containing Besigye we’re arriving this morning. The Journalists wishing to attend and see the arrival we’re blocked from doing so. The Pro-Change Youth who wanted to decorate roads around Entebbe we’re arrested the numbers we’re up to 26 people alone there.

While at FDC Headquarters Najjankumbi we’re besieged by the Police Command of the area and there we’re even a military helicopter flying over. While 200 supporters and FDC leadership we’re stuck inside as the Police Officers and such kept the Political Party of Besigye under siege yet again.

fdc-hq-10-09-2016

As the Airplane arrived and opened for the people to disembark the security outfit, somebody claims the Flying Squad aka Special Force Command that is under Museveni’s son Brig. Muhoozi. That they we’re going into the plane with Civil Aviation Authority clothes and kidnapped him one the spot as they whisked him into a CAA vehicle on the ground. They just took him without his passport and his luggage as he was taken away without knowing his final destination. Nobody knew but the captors.

In the early morning the FDC officials and FDC VIPs like FDC MPs we’re not allowed by Airport Security to even be at the VIP Lounge to congregate and make festivities for the arriving Besigye, as they didn’t know at that point that he would be kidnapped by CAA people or people we’re CAA clothes.

There we’re roadblocks between Kampala and Wakiso, to be correct into Kasangati where Besigye resides and famously known as Kasangati Statehouse. That we’re blocked and there we’re mambas and Anti-Demonstrations vehicles all around the roads as the fear of the government as the Political Party leader of FDC we’re coming home.

As in Kampala the Clock Tower we’re sealed off, there are even reports of tear-gassing the public on Jinja Road. While the Police Officers and Police Cars we’re everywhere taking civilians into jail or whisking them away.

“Moses Walugembe (NBS reporter): “We’ve been told journalists aren’t allowed to proceed to the airport. We have asked the officers why we are being blocked and an officer told us they are under orders. Access to the airport is limited to passengers” (NBS TV Uganda, 2016)

At Kitubulu on Entebbe road from the packed Kajjansi Police Post the traffic corresponding the area, all of them we’re checked by the Police Officers before being allowed to continue to pass towards Entebbe. The same Police even stopped a man for going with Matooke on the side of the road and took it from the man.

Doreen Nyanjura statement today:

Here at Entebbe police station, Police goons have come with stones, sticks and pangas! They want the activists to take photos With the stones, sticks and Pangas! Fortunately they are defying and I have joined them in the defiance. We have chased the camera man away. What nonsense is this! This is not the first time these goons are doing this!” (Nyanjura, 2016).

The Supporters ready to greet Besigye in Kampala with Blue Colours and gear we’re either whisked away or detained as the regime don’t want to look weak as the People’s President we’re arriving home.

besigye-kasangati-03-10-2016

Kizza Besigye: ”What happened today is a clear demonstration that I am the people’s president. I got here with a whole convoy of police cars, all with sirens, bringing the president back. I have not come back officially. My passport is not stamped. My luggage is still at the airport. Some police officers went to claim my luggage, a thing Kenya Airways refused to do” (NBS TV Uganda, 2016).

At Makerere University Pro-Change students who we’re preparing for activity today we’re also detained as they we’re not allowed to celebrate the return of Besigye.

There we’re so much un-necessary behaviour of the Police, but this is the proud men of IGP Kale Kayihura and Mzee, they cannot do otherwise. The planned meeting and the regiment of Police earlier days ago we’re not transparent as they had to violently and with brutal misconception of freedom take him away from the airport.

The NRM regime is weak when they fear the man this much and does this to civilian without an army or a guerrilla. They do this to man who wants accountability and transparency, a government governed by the people. He is flogged and stolen away his freedoms for the cause of them. President Museveni and his elite is weak unit when they cannot muster a gentler force and better will power than this.

The FDC and Dr. Kizza Besigye knows that this cannot go on indefinite as the use of resources and time will trickle on the power and their reputation as the news of their unneeded activity towards the opposition like today. The repressive and oppressive behaviour that I hope leads into more Organizations and more Multi-Nationals like World Bank and AIG pulls out their support of funds towards the NRM regime and their eating of the poverty of their citizens while the voices of the citizens struggle to live and have freedom. Peace.    

Two People Arrested for Passport Fraud at Entebbe Airport (Youtube-Clip)

The directorate of citizenship and immigration control together with police have arrested two people in connection with passport related fraud at Entebbe International airport. The two, one a Nigerian national and another Ugandan were intercepted during a crackdown carried out yesterday at Entebbe airport” (Dennis Duke, 2016).

What NRM’s #Steady Progress really is…

KCCA at work

We all know that the election is going on and that NRM have a campaign slogan as such: “Steady Progress”. This is the time when NRM is telling in each district they visit about the 29 years of “steady progress”. Well, I will not, I am not NRM. And not a great fan of the NRM. As those of you who read my page/blog should understand by now. I will show another story of the #Steady Progress have been under the NRM and Yoweri Kaguta Museveni’s presidency.

#Steady Progress under the NRM-Regime is that there been violence and arresting the opposition leaders with different claims. And have rhetoric that attacks others then look into their own missteps. Especially when Mzee hear the reports of the violence were from NRM-Supporters together with the Police in an area (Ntungamo clashes for instance). There isn’t the first time the President Museveni spreads fear in the name of democracy and not the last. He can put his words into a leopard’s mouth and see if the animal bites.

#Steady Progress is to have close hospitals in the weekends and having no nurses at the referral hospital in the districts. #SteadyProgess is to suspend health workers after showing the terrible working condition of the Health Care facility.

Burundi Report Police

#Steady Progress is to use the colonial law of preventative arrest when it fits the NRM-Regime and if it fits the new law Public Order Management Act then the Police will take care off or silence Political Opposition leader, Human Rights Activist or even random pedestrians.

#Steady Progress is that the police tells the world and journalist on how to conduct themselves and how to be a part of campaign convoys of the opposition leaders.

Jinja Police 10915 P1

#Steady Progress is that the Police are interfering in Opposition leader’s rallies instead of securing them.

#Steady Progress is to give a higher pay-rise to the Electoral Commission chairman from 6 million shillings a month to 35 million shillings each month.

#Steady Progress is first to lose the money to sustain and make the National ID cards, and not give them to the citizens. Then later deliver this to the Internal Displaced People in the camps and also immigrants from neighbor countries then the initial voters and citizens of the country.

#Steady Progress is to have terrible roads in and around the villages. #Steady Progress is to finally have rail system working between Kampala – Namanve, but not for the rest of the country, and it had to happen right before the election.

cadets10 UPDF

#Steady Progress is to go into neighbor countries with the army without international mandate for securing the friends and caretakers of nations around to secure loyalty to the President of Uganda, not to secure Uganda.

#Steady Progress is to make the currency weaker and weaker. #Steady Progress is to make the Bank of Uganda a personal visa card for the government because of the new amendments to the Public Finance Bill of 2015.

#Steady Progress is to make the nomination of candidates for elections more expensive so only the ones that are friends and cronies of the President will be sure of having the funding and support to stay on as candidates.

#Steady Progress is to bankrupt the national airliner and still only have on international airport in the country, also to get British Airways to cancel their flights to Entebbe and stopping fly to it after the set date of contract with the Airport.

Cars 051115 Frank Tun.. P1

#Steady Progress is to give away expensive cars to Regional District Commanders to ensure the safety of NRM and not the people of the northern regions.

#Steady Progress is to promise loyal cronies more districts and sub-counties to secure loyal men in charge over areas and make the opposition unsure of the new constituency.

Kable NRM Primaries P1

#Steady Progress is to have a chaotic internal elections with pre-ticked ballots, late ballot delivery, wrong names on the ballot, stealing the forms for final counting, winners jailed for misconduct, bribing voters in villages to vote for candidates, letting members of other parties vote in the internal ones, sole candidacy in many constituencies and also clear indication of rigged for loyal Mzee men and woman.

#Steady Progress is to land as hunting-grounds or for services rendered for the government either to the likes of Aga Khan or other foreigners, even trade of forests and mineral rich land, to get it pocketed while the Government of Uganda can.

#Steady Progress is to borrow more and more money to fund the aid deficit created by the “Anti-Gay-Bill” fiasco. That left a vacuum from foreign interest together with the strategic loss of partners to sustain their aid to the country and picking other feasible projects there.

#Steady Progress is give money to religious leaders to secure their congregation who their God has picked as leader and who their lord has anointed to the position.

#Steady Progress is to get a bigger government and more ministries so that all the ones closes and most loyal get a place in the central government.

Uganda Parliament Museveni

#Steady Progress is to give a person the role of ministry without a portfolio or office

#Steady Progress is to use more on private plans and military equipment then on basic school kits, school buildings or even medical supplies.

#Steady Progress is for the President to claim again and again that he is the only Mzee who can keep the country safe and keep control of the army.

#Steady Progress is to have old medicine or copy medication instead of having extra supplies through the NMS.

#Steady Progress is to have ghost-workers, ghost-voters, ghost-schools, ghost-roads or ghost-expenditure.

#Steady progress is to fire all of the UNRA workers and getting the funding for bigger projects through the World Bank cancelled.

#Steady Progress is to see that Uganda Human Rights Commission loses it funding from it’s donors.

Crime-preventers-on-the-parade-in-Kasese-district-2

#Steady Progress is to hire “Crime Preventers” as securing votes and create havoc in other candidate’s rallies to make sure that people stay loyal to the Mzee, and also ship them from NRM rally to NRM rally to make the party look more popular.

#Steady Progress is to have more and more car accidents on the bad roads, even lose the lives of more Members of Parliament due to bad roads in the districts.

#Steady Progress is for the rich and for the wealthy to take their family members or themselves to health facilities abroad to heal and prosper.

#Steady Progress is to borrow money on the future-oil monies and trade of the oil refinery from Russian state-owned company to buy military equipment.

#Steady Progress is to lose battalions and soldiers in Somalia and leave new recruits with little or no supply. The army in Somalia has to sell equipment for food and necessities; instead of fighting the terrorist group Al-Shabab.

#Steady Progress is that landslides after heavy rains and floods have no covering or security funds from the government nor any restrictions or helping agents to save lives on that matter.

#Steady Progress is given funds of 51 billion to the post-election violence for the Police and army for the “excuse” to secure the safety and peace in the country.

#Steady Progress is to tear down other candidates posters while sealing off and securing with Police force the incumbent presidential candidates ones on the walls.

Ready to Move with Sevo Music Campaign for 2016 P5

#Steady Progress is to use a tiny fortune to make a gig-song and have singers on the campaign trail.

#Steady Progress is to pay boda-boda men in town and villages to not drive to opposition rallies.

#Steady Progress is to have a rising inflation and devalue the currency before and after every election time, leading the results for more expensive fuel, food and living prices in general. 

#Steady Progress is to send SMS’s to everybody to tell them to VOTE MZEE, even if they don’t are NRM members or belongs with the Party, instead he sends to all Ugandans in the companies to gain support.

#Steady Progress is to pay boda-boda drivers to drive people to Mzee’s venues, give away t-shirts, give away free fuel, feed the public food and give money to the attendance of the crowd.

#Steady Progress is to use 500 billion shillings for campaigning for the presidential candidate, to give out handouts to loyal men and woman in the districts, cars to chiefs and other gifts of that nature to feed the loyal NRM people in up-country and the rest of the country.

#Steady Progress is to close off transmitter of radios who send messages opposing the NRM-Regime.

#Steady Progress is to deliver a campaign package of 20 million shillings to NRM Parliamentary candidates.

We can all see and this a gist of the actions and events leading up to the 29 years of #Steady Progress from Mzee and his NRM party. This was certainly not the things he fought for in the bush-war or the idea he sold at the time. It has surely changed. I could have displayed all the corruption cases, embezzlements and such, but as I said this gist of the actions from the NRM party and Mzee. We have not taken in account his foreign adventures and military actions, or all the people that have been left behind. Peace.

Uganda’s Medium Term Debt Management Strategy for FY 2015/2015 – FY 2019/2020: What is it all about?

UGX Pic

Here you will see what strategies and plans the Government of Uganda has made for their loans and debts. This is about how the Government will deal with it and how it can be done. The numbers tell what they can expect if they pick the certain ways of dealing with it. It shows what can happen and the shock scenarios are important.

This should be seen as important to follow especially with the growing debt and the rates that come with that. Therefore it will be something that should be monitored. From the sustainability of the ratio according the GDP should be something that also brings fear. Especially since this will have general effect on how the general economy will be hit with the down payments and strain the basic budgets of the government. There its a viable thing that should be well known by people, because this will have big importance until FY 2019/2020

“The Uganda Vision 2040 aspires to transform Uganda into a modern and prosperous society within 30 years through provision of adequate infrastructure, development of agriculture, human resources and services sectors, enlargement of markets, strengthening of the private sector and through industrialization” (…) “Implementation of the Uganda 2040 Vision will require substantial resources that will partly be garnered through the domestic and international borrowing. To ensure that our debt remain sustainable, such borrowing has to be carried out through a properly formulated Medium Term Debt Management Strategy (MTDS)” (MTDS, P: 4, 2015).

“The key aim for the MTDS2015 is to ascertain the cost and risk trade-off of financing the medium term fiscal deficit through borrowing while remaining mindful of our debt sustainability” (…) “To meet Government’s financing requirements at the minimum cost, subject to a prudent degree of risk; (ii) to ensure that the level of public debt remains sustainable, both in the medium and long term horizon while being mindful of future generations; and (iii) to promote the development of the domestic financial market (MTDS, P: 6, 2015).

Strategies:

  1. Traditional post debt relief approach of prioritizing concessional financing.
  2. A debut Euro-Bond: The Sovereign Bond Issuance which risks the cost and the trade-off of the International-Market and financing alternative.
  3. Non-Concessional borrowing and meeting with bilateral with commercial creditors negotiations.
  4. Reliance on Domestic-Financing establishing the cost and risk trade-offs, which risk less since it’s from the Domestic-Financial-Market.

(MTDS, P: 6-7, 2015).

Cost & Risk Debt Uganda

External Debt Stock:

From FY2006/2007 it was Domestic Debt and Outstanding(DoD) was US$1.47 billion. And in FY 2013/2014 had risen to US$4.3 billion (MTDS, P: 13, 2015).

External Debt Stock Uganda

Domestic Debt Stock:

Domestic Debt Stock

Refinancing:

External debt maturity for the ATM (Average Time for Maturity) was 18.9 Years. The plan is setting that the in 2.3 years will the ATM be 11.8 years.

Public Debt Maturity Profile under REFINANCING

Currencies:

Currency Distribution P17

Aggregrate Medium Term Debt Strategy:

The outlook for the 5.3% in FY 2014/2015 and is looking to reach 5.8% in FY 2015/2016. The plan forward is to attain an average 6.3% for the fiscal framework (MTDS, P: 17, 2015).

Selected Medium Term P18

Government expenditure is on an average to be 20.9% of the GDP for the FY 2014/2015. In the 2015/2016 it is 21.7% of the GDP. The main expenditure for the budget is the infrastructure projects like the upgrading of Entebbe International Airport, Hydro Power projects and Albertine Regional Airport. The total cost for the projects is US$7.0 Billion. There is set to be 5% target for the inflation rate and the exchange rate is set for 12.1% in FY 2015/2016 and average for 2.4% the rest of the years for the medium term (MTDS P: 17-18).

Stylized Financing Instruments:

Two instruments:

i: International Development Association (IDA) has the interest 0.75% for the maturity of 38 years.

ii: African Development Fund (ADF) has the interest 0.75% with a maturity of 40 years.

iv: The concessional is with fixed rate loans with 23 years maturity and 6 year grace period. These terms comes from IDA-Blend, Kuwait Fund, Abu Dhabi Fund, UK-Export Credit Guarantee.

v: The fixed rate instrument on the Euro Bond which is priced on a ten-years US-Treasury interest rate.

vii: With Pure commercial loans is a instruments with a 7 years of maturity and with a 3 years grace period.

viii: One T-Bills is a domestic market debt instrument that has a maturity of 91 days, 181 days,  and 364 days.

ix: Four T-Bonds is a domestic market debt instrument that has a maturity of 2, 5, 10 and 15 years.

(MTDS, P: 18-21, 2015).

Stylized Financing Strategy P22

Four scenarios for the Market:

First Scenario: The first thing is possible currency depreciation – is that in the FY 2015/2016 can end up with 30% depreciation and will have to work to sustain that through to 2019/2020.

Second Scenario: A sharp off increase in domestic rates for 2015/2016 and at the Interest Rate will follow the baseline of the Foreign Currency.

Third Scenario: Domestic Interest Rate still set to be baseline assumption that we’re set. And that the denomination on the Foreign Currency following the instruments set for it.

Fourth Scenario: That the Decapitation of the UGX towards the US Dollar in the amount of 15%, that can lead to a shock in the domestic yield a curve for the 2015/2016.

(MTDS, P: 23, 2015).

Analysis of the strategies:

That the total debt-to-GDP from the current level of 28.6% by the end of June 2014, if the end of the time it might end up with 50% level by 2020. This is because of substantial projected increases the fiscal deficit. With the worst strategy the interest rate can go from 1.4% in June 2014 to become 4% in 2020 (MTDS, P: 24, 2015).

MTDS P25

 

MTDS P29

 

MTDS P30

Hope you have found it interesting and learn something of the Government of Uganda planning of dealing with their debt. And how they see the future for their economy. Then what kind of strategies and scenario’s that could appear and how they will appear together. The Financial Years that are ahead and how the Ministry of Finance, Planning and Economic Development thinks of their economy. Hope it give you something and also a little feeling about how the economy might progress.

Peace.

Reference:

Republic of Uganda/Directorate of Debt & Cash Management – Ministry of Financing, Planning & Economic Development: ‘Medium Term Debt  Management Strategy’ (MTDS): 2015/2016 -2019/2020 (April 2015).

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