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Archive for the tag “Hon. Matia Kasaija”

Uganda: Kasaija plans to borrow $190m extra to cover a budget shortfall within two years!

Someone please call 911, yeah yeah (pick up the phone yo)

Tell them I just got shot down, tell them I just got shot down

And it’s piercin’ through my soul (I’m losin blood yo)

Feel my body gettin’ cold, oh, so cold

Someone please call 911 (can you do that for me)” – Wyclef Jean ft Mary J. Blige – ‘911’ , April 2000

In an election year in the Republic, the economy usually runs loose. The State House lacks suddenly funds, the President needs more and so fourth. That is standard procedure. However, on the 19th March 2020 Matia Kasaija has now announced that the plans to borrow USD 190 million to cover a short-fall of funds, because of the COVID-19 or Coronavirus.

This is deemed fit because of the pandemic and the financial disruption it has. Not that the Republic is alone in this. Other big states and plenty in the Western hemisphere is putting up packages of economic stimulus to salvage the economy because of it. So, the sentiment is understandable. However, the Ugandan republic is already heavily indebted and every single development project of late is covered by debts and debt relief. Not like its sustainable to take up nearly USD 200 million to suddenly boost a dying economy.

Here’s the quotes:

The low activity in industry and services sectors will result into loss of jobs further leading to a decline in economic growth and an increase in the level of poverty. The number of people that could be pushed into poverty is estimated at approximately 780, 000” (STATEMENT ON THE ECONOMIC IMPACT OF COVID.19 ON UGANDA,, 19.03.2020).

To deal with the financing gap in the Government budgets for FY 2019/20 and FY 2020/21, my Ministry will seek for a budget support loan on concessional terms worth US$ 100 million for FY2019/20 and US$ 90 million for FY202021 from the World Bank” (STATEMENT ON THE ECONOMIC IMPACT OF COVID.19 ON UGANDA,, 19.03.2020).

It’s seems like they have the perfect cover for rising debt. They need to do something, because lots of industries are shut-down or silenced by the lack of tourism and foreign exchange. Also, the diaspora is hit and can therefore, not remit enough funds to boost the economy either.

The MoFPED really want to stain the economy more. To quote the IMF:

““Rising debt puts more strain on the budget as more resources need to be allocated for interest payments. One shilling paid for debt service is one shilling less going to a school or a health clinic. The current ratio of interest payments to revenue is comparable to what countries with high risk or in debt distress typically face” (IMF – ‘Uganda’s Economic Outlook in Six Charts’ 09.05.2019).

By borrowing close to USD 200 million is really pushing the envelope. As the interests needs to be served, the grace period might be short, as the state of finances across the board is souring. Therefore, the state will not get to favourable terms with this. The World Bank also has all other states begging for funds and possible grants to push the set-back of the pandemic. Not like Uganda is the only one crying out loud and applying for money.

This money will not be free money, but tainted money. This sort of funds is needed, because the state wasn’t planned nor had the capacity to have a rainy-day fund. The Petroleum Fund has already been raided and therefore, couldn’t come in handy now. This is the mismanagement, your already in a negative spiral with more and more loans. This is just adding two more and they are big. That will cost in the long run. It might salvage today and tomorrow. However, it will scar the next generation. Unless, someone is forgiving like these entities was in the early 1990s. Before the state again took up huge loans to cover deficits.

This is just the way it is now. Not a good look. Understandable in the growing crisis. However, that shouldn’t undercut the possible pain it will bring in the future. Save the day, but cause more harm tomorrow. Peace.

Bank of Uganda: Measures to mitigate the economic impact of COVID-19 (20.03.2020)

Bank of Uganda: Monetary Policy Statement for February 2020 (13.02.2020)

Mobile Money Tax shortfall: People change behaviour after levying an unfair tax

Levy on mobile money contributed a deficit of UGX 30.48 billion which can be explained by the fact that high value clients withdraw their funds from agency banking e.g MTN has had a drop of 36 percent in MM transaction values since the introduction of the levy on mobile money” (Uganda Revenue Authority, 06.02.2020).

There is also reported that it has been a 36% drop in Mobile Money Transactions since the enaction of the Exercise Duty in 2018. That means, the added tax on the MM transactions are backfiring. The State isn’t adding revenue, but ensuring that people are finding other ways of moving their money.

This is not shocking, that people change behaviour, when the state makes it more expensive. As the people used these services to send each other money by convenience. Now, one third of the transactions are gone. Meaning, the ones that can change their ways has done that.

The losers are not only the Telecoms, but also the state. As the shortfall of taxes got to be covered elsewhere. As the state had put this into the budgets to cover other state works. This means the targets for domestic revenue wasn’t considering the implications of doing it. As, there wouldn’t be an natural reaction to the consequences to the new taxes.

Instead of increasing the tax base, they are making it smaller and not able to find measures that makes sense. The state has clearly done this without due diligence, neither also configured the stats and the possible behaviour of the public. As their ways gotten more taxed and not considering that they would stop, if they found it to expensive or unreasonable.

The MM tax and the OTT taxes was measures made to tax the digital market-space in the Republic. However, they have both been flawed and also not met their targets, because the public found other ways of doing things.

The ironies about the MM saga is that before the tax, the business of MM was growing. A natural growth and having more transactions every year. Now, that they levied the tax its has a big fall. That is a result of the MM Tax and the public is not having it. Peace.

Opinion: OTT Tax on Data Bundles is like a dual-VAT

“URA Commissioner General Doris Akol told the Finance Committee of Parliament chaired by Henry Musasizi that the controversial OTT Tax will be charged directly on data instead of mobile money to curb the evasion” (NBS Television, 14.01.2020).

I wonder if Doris Akol has thought this through or is winging it? As she see the losses and lack of results, revenue or tax base with the 200 shillings of doom. The whole OTT Tax is to expensive for the public daily. Now, she wants to move it and indirectly tax it instead.

Surely, they will get revenue, but this will make it more expensive to buy data-bundles for the customers and make the packages more viable. VPN and similar networks to circumvent the usage and payments of the daily OTT Tax have beaten the Uganda Revenue Authority (URA). That is why URA does this now.

It is a sign of defiance and civil disobedience. They are trying to patch the hurt. But will this succeed? Will more try to only load data through Wi-Fi networks and wireless networks in general. Not load so much data on the go. Because, people are smart and tries to undercut extra taxes. Especially, when on the data is already paid VAT and the Mobile Company pay their taxes on the profits too.

Therefore, URA and Akol seems fishing. They will raise revenue, but also make the data bundles more expensive and with that stop plenty of people from buying bigger data bundles for surfing online on your smart-phone.

That is just the mere reality. It is a sign, yet again that the OTT is a failed project, who didn’t hit the targets and wasn’t measured right. If it was, the aim and the bargain wouldn’t be like this. That is not happening.

This method is a clever way of adding the costs of data, while charging for service not necessarily used. The OTT Services, which is the reason for why these are charged. Because, the data could be used for other things and therefore, is violating its attempt to make it costly for certain usage on online.

This is again, pushing one story, pushing one tax and trying to tax the public by any means. When the hook doesn’t work, they use the crook. Instead of doing directly, they want to do it indirectly and initially in some way adding a separate VAT on data-bundles masked as OTT Tax. That is really it.

We all know this, URA verify it today. That the only things certain in life is death and taxes. Thanks Akol for reminding us. Peace.

Opinion: Museveni ask his new ministers to desist from himself…

I call upon all ministers and public servants to desist from engaging in any form of corruption. Corruption by any government officials is a great betrayal to Ugandans who are desperately yearning for service delivery. I implore the general public to embrace this fight and report the crooked officials with evidence, as opposed to rumours and we will take action” (Yoweri Kaguta Museveni, 13.01.2020).

President Yoweri Kaguta Museveni, the President since 1986, whose now richer than God, but came into power with little or nothing. Therefore, he knows what he did to get there. He knows the implicated scandals, the grand corruption and often noticed missing funds in the headlines in the Republic.

That is why these sorts of desisting from corruption Telling the Ministers and the Public from stopping it. Meaning it should stop and get all evidence on plenty of high ranking officials in this government. Get the evidence of state owned enterprises and authorities. There are plenty of officials who would easily be implicated and connected with government tenders and whatnot.

There is enough ghosts, over-inflated state contracts and some-what. Therefore, days like today. Feels futile. The state has created a lot of mechanisms, a lot of organizations fighting corruption. Still, the big-men, the men sanctioned by the State House and the secretive investment deals are overshadowing the supposed battle against corruption.

When there is lack of transparency from the top. There will be less from the bottom too. There is no reason for changes, when everyone is eating and the ones with influence of the State House. They got an ability to get kickbacks, suits, graft and so-on. This is not news, but a reality.

The NRA historicals can steal land, take property and easily, therefore have other perks too. The NRM knows this and let them go. If your big enough and has the blessing, you can eat UNRA funds, eat NSSF funds and GAVI Funds with no costs or damages. You get to build a mansion and own business, on stolen funds.

That is why statements like today is worthless. Not believable. He has the Public Procurement And Disposal of Public Assets Authority (PPDA), Financial Intelligence Authority (FIA), State House Anti-Corruption Unit, Inspectorate of Government (IGG) and Auditor General (AG). Nevertheless, the big-fish is not getting caught. You have the Police Force and the Judiciary too. Still, all of these cooks cannot make a decent meal. Its a bland mix of watery soup, not even a good broth.

That is why President Museveni. We have to see you fight yourself. Not walk, not talk, but battle your own shadow and that’s not happening. Because, your not a cartoon character, but a self-styled President for Life. Peace.

Press Release by the Secretary to the Authority National Drug Authority: Clarification on Drugs Recalled by National Drug Authority (13.12.2019)

Bank of Uganda: Monetary Policy Statement for December 2019 (09.12.2019)

Opinion: Mr. President your late to the party…

I have a hard time believing that President Yoweri Kaguta Museveni and the National Resistance Movement (NRM) will stop creating districts, sub-counties and whatever local government administrations in the Republic. They will never really cease doing so, because they constantly carved the Republic into tiny pieces. So, that every single Sub-County today can become a district in the near future. It should be a joke, but looking at history, than it isn’t far-fetched at all.

By seeing this one piece from the New Vision:

In 1986 when NRM took power, Uganda had 33 districts which increased to 81 districts by 2008. The districts increased to 112 by 2011, but reduced to 111 after the Capital city ceased to be a district” (John Odyek, Mary Karugaba and Moses Walubiri – ‘25 more districts created’ 19.07.2012, New Vision).

Than my own calculation from November 2019:

The State has continued to create the districts and sub-counties. In 2016 there was 112 districts and by 2021, there will be 135 districts. As well as there was 1,403 sub-counties in 2016, while in 2021 there will be 2057 sub-counties.

With knowing this and the knowledge of the mushrooming state. There is bit a late to cry foul over more town councils and the affordability. When during your time the state has gone from having 33 districts to 135 districts in 2021.

Therefore, this warning seems a bit late:

They are going to be too many and not affordable. Let the little money we have be concentrated first in maintaining security, building infrastructure(roads, railway, electricity, schools, and health centres) and not expanding administrative costs,”Museveni warned in November 28 letter to Butime. The warning by the president comes at a time when government recently announced the creation of 162 new town council that started being operational this year, whereas others will be operational by July 1, 2020” (Kenneth Kazibwe – ‘Museveni warns against creation of new municipalities’ 08.12.2019).

Because of this, I don’t believe the man. I really don’t believe the President and his motives here. It is weird that he has issues, when his made so many districts and sub-counties already. That creating further town councils only follows the modus operandi of the state.

Not like its a revolutionary idea from the state to make more. It would be more shocking if he started to merge sub-counties and districts. So, that it would be less districts and sub-counties in the Republic. In this current stage and time, that would have been positive and plans for actual change. However, than the devolution and the years of curving the districts. It would show the public that it was only political motivated and not really making government better.

That he warns about this in 2019 after 33 years in power and been so hyper-active with creating smaller entities. His surely the wrong man to signal the red-flag. Yes, the state cannot afford more town-councils and such. But that is because the state has already to many districts and sub-counties to pay for.

The state is already deficit financing, the mushroomed state, which the President and his men has created over the years. That is why, writing a letter this year isn’t solving anything or making a difference on the negative and expensive spiral, the President has started. The President knows this, but thinks this make him look smart. When it doesn’t, since his in charge of all these small entities and that will part of his legacy. He can cry now, but his crocodile tears are coming late.

He should have stopped before he created a 100 districts more in his time. Who knows how many sub-counties his created, but surely a 1000 by now. Than count the Municipalities and Town Councils, than you get humongous number. That is what bloated numbers sound like. Therefore, sending out warnings now is late from the old man, he should have done it long time ago, but he didn’t care. Peace.

Deficit Financing: MoFPED propose to borrow 2 trillion shillings to cover the budget shortfall!

Deficit financing, however, may also result from government inefficiency, reflecting widespread tax evasion or wasteful spending rather than the operation of a planned countercyclical policy. Where capital markets are undeveloped, deficit financing may place the government in debt to foreign creditors. In addition, in many less-developed countries, budget surpluses may be desirable in themselves as a way of encouraging private saving” (Encyclopaedia Britannica – ‘Deficit financing’ (25.08.2015).

In the original budget for 2019/20, the estimated domestic revenue of the state was about Shs. 20 trillion shillings, while the rest would be covered by close to Shs 10 trillion shillings in this manner the budget would cover the 40 trillion shillings. Today in Parliament, the debt trap, which was forecasted by several of Civil Society Organizations and others was proven.

Not only with the recent stipulation of the first Supplementary Schedule to the Budget Year of 2019/20, but also the lack of domestic revenue. This again proves the trouble with generating even half of the budget. As the Parliament are this week, either accepting borrowing 2 trillions domestically to boost the lack of domestic revenue. That means the Uganda Revenue Authority (URA) and the state haven’t delivered on the promise. As the state was spending more and more, but not having the funds to do so.

Therefore, if the state does this. Than, Shs. 2 trillions are loaned to cover for the lack of delivery, the lack of preparations from the government and the added costs of the local government units created. The government knows this, but acts surprised that state have to invest in it. That’s why they have a supplementary budget for it and surely there will be more schedules before the end of the financial year.

Just look at this:

To address the projected revenue shortfall presented in paragraph 3 and the additional expenditure pressures presented under paragraph 9, Government requires a total amount of Euro 600 million equivalent to UGX 2,439 bn (Two Thousand Four hundred and Thirty-nine Billion) to finance part of the budget deficit” (Ministry of Finance, Planning and Economic Development (MoFPED) – ‘THE PROPOSAL TO BORROW UP TO EURO 300 MILLION (EURO THREE HUNDRED MILLION) FROM STANBIC BANK (U) LTD AND EURO 3OO MILLION (EURO THREE HUNDRED MILLION) FROM TRADE DEVELOPMENT BANK TO FINANCE THE BUDGET DEFICIT FOR FY 2019/20, December 2019).

Given the revenue performance in the first two quarters of the FY 2019/20, the projected revenue turnout for FY 2019/20 is Shs 181575.18 billion, against the target of Shs 20,448.73 billion. This

reflects a projected shortfall of Shs 1,873.55 billion” (MoFPED, 2019).

In line with the above Section of the PFMA 2015, Ushs 437.631 billion representing 1.08% of the Approved Budget for FY 2019/20 has been authorized by the Minister of Finance, Planning and Economic Development as Supplementary funding. The purpose of this letter therefore, is to submit Supplementary Schedule 1 FY 2019/20 for consideration by Parliament. Please make arrangements for the Minister of Finance, Planning and Economic Development to lay the schedule before Parliament” (Keith Muhakanizi – ‘SUPPLEMENTARY SCHEDULE 1 FY 20I9/20’, 21.09.2019).

Rt. Hon. Speaker, in line with Section 25 (1) of the Public Finance Management Act, 2015 (as amended), I authorized and have accordingly submitted to Parliament Supplementary Schedule 1 amounting to Ushs. 437.6 billion for this FY” (MoFPED, 2019).

In line with the above, the budget for FY 20Lgl20 is facing the following constraints:

– URA shortfall in revenue of Shs 1,873.55 billion;

– Additional expenditure pressures of Shs. L,432.2bn

– Non-receipt of World Bank budget support funds of Shs. 375 bn

and

– Non-receipt of capital gains tax of Shs. 225 billion (USD 60

million);

10. The total revenue resource shortfall in the FY 2019/20 therefore amounts to Shs. 2,473.55 billion” (MoFPED, 2019).

We know this is serious, when the budget of the FY 2019/20 was 40 trillion. When 2,4 trillion of these have to get borrowed domestically. Even if 437bn of these are supplementary budget and wasn’t in the original budget of the FY. Still, the 2 trillion are a big slice to borrow and gain more loans. This is a debt trap, trapped by even more trap. As the tax-base isn’t growing as forecasted or as possible. By this estimation of the original budget, the domestic borrowing in this financial year would go up from about shs. 10 trillion shillings to about shs. 12 trillion shillings.

Because, with to much taxation, the funds are taken out of the circulation and isn’t spread as much. Not having the ability to generate more earnings for the citizens. They cannot spend, because they are actually paying taxes. That’s why you need sustainable taxes, which makes sense.

That’s why these loans are coming, because the state defaults on taxes, lacks the tax-base and doesn’t have the opportunity to gain the needed revenue. This the reality of the state. They will ask for the loans and add more debt. However, the government will not take responsibility for the acts done. The state are deficit financing and not generating revenue. That is why they are loaning even more debt. At a rate, which should worry anyone following it. Peace.

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