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Archive for the tag “International Economic Activity”

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

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

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

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

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)

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