A very brief look into the recent appointments of Permanent Secretaries

Yesterday, President Yoweri Kaguta Museveni has had his little reshuffle of Permanent Secretaries to the Ministries and Offices of the State. There wasn’t much juice to see. It wasn’t like he offered yet another Forum for Democratic Change (FDC) leader or stalwart to a position. No, Museveni just did more of the same.

Plenty of the secretaries retained their roles and continues to be “permanent”. This being Lucky Nakoybe and Dr. Kenneth Omona who is kept in the same office. Someone who is lucky and in good favours of the state is Keith Muhakanizi who went from the Minister of Finance to the Office of the Prime Minister.

The appointment of Dr. Ramathan Ngobi, the aide of Salim Selah, the brother of the President has been appointed to be the Permanent Secretary of Ministry of Finance, Planning and Economic Development (MoFPED). A clear indication of how family affairs mattes and this is why Muhakanizi was moved to another office.

The one that sent a begging letter recently to the President after losing in the election and not being appointed to a Ministry. The forever in the public eye, Adolf Mwesige was appointed as a Permanent Secretary as a Clerk in Parliament. So, the President has him still in his good favours, as he knows he will be loyal for yet another appointment.

All of the President’s appointments are more of the same. These are just the few I see worth mentioning. Museveni is recycling most of the same people. Just a few new faces, but these are known for the general public.

The NRM doesn’t change and neither does the President. This is just more of the same. It is just some changing chairs, but not appointing more qualified or better equipped people. No, these are hired after loyalty and not after merit. That’s why these folks continues to get retained and work like they do. Peace.

Common Leauge of Ugandans in the Disapora: Uganda IMF US$1 Billion Planned Disbursement (24.06.2021)

Opinion: Museveni and the NRM is in a ill-advised debt-cycle

The National Resistance Movement and President Yoweri Kaguta Museveni have created a negative spiral of debt. The state have taken out more and more debt over the years. The CSBAG, Uganda Debt Network and other organizations have spoken out about this. As the state have the need to pay more in interests and it takes away more from the general budget.

Now the state is saying it has 65 Trillion Shillings in unsustainable debt. That is happening after the Parliament have had sessions over the last few years. Where the only thing they do is to vote over debt and approve more loans to the state for various of development projects, roads and you can wonder if it does anything.

The state is now owning a lot of money. More money than it usually uses in a state budget. The state budgets of late have had half of the revenue coming from domestic taxes and the other either grants or loans. There is also additional supplementary budgets, which is coming in cycles during the budget year. Which is adding more debt… and creating more debt.

There been worry about the rise of debt, but the NRM and the President has said it has been done within reason. However, that is now the chickens coming home to roost. There is enough problems ahead and the state has created this financial conundrum. It has been done deliberately over time.

The Parliament is on the regular issuing now loans… and taking new loans. While hoping one day they have the revenue to actually do these things. The state is spending money and funds it doesn’t have. That is an unforgiving task… and the NRM cannot run away from this.

The NRM have created problem. The appointments of the President is doing this. The Bank of Uganda (BoU) and Ministry of Finance, Planning and Economic Development (MoFPED) should have seen this coming. They have been looking over the expenditures and the interests rates. They know when the grace periods of the loans are over. These folks are the ones who has the oversight and supposed sound judgement to advice the Parliament to accept all these loans. However, that is clearly not the case.

The state is crippling its budgets, overspending and over-loaning funds over time. Now, the creditors and debtors wants their pieces of coins back. They cannot bail on it or default on it. Then the state will not be trustworthy and be credible as a economic broker. The state is clearly struggling and lacking funds. That’s because they are having trouble to raise domestic revenue and have to high costs.

This is a self-inflicted ill-advised debt-cycle. A government not listening to CSBAG, Uganda Debt Network and others. The NRM and Museveni should have done that. It will be harder for them to get solidarity this time around. As the Museveni era of now is destructive. The state actions against its own citizens and totalitarian acts. Is not the ones who makes outsiders forgiving like it did in the early 1990s when Museveni was part of a new group of leaders that the West had hopes in. However, that boat has sailed and the truth has come out. That is why Museveni is still there and depleting the state like there is no tomorrow. This is why the debt is rising and its run without any balance of the budgets. That is why the debt is rising and there is no way out.

They want debt forgiveness. However, getting that now will be a feat, but not sustainable either. As this state will just take out new loans and not re-coup or try to absorb the lack of revenue, which is causing the problem in the first place. That is why the state doesn’t have any liquidity or equity to trade for the lack of revenue. It is just a sinking boat and the captain seems clueless…

Deficit financing can only take that far and now its at the end of that journey. Peace.

The State propose a 0,5% Cash Withdrawal Tax (!)

The Ministry of Finance, Planning Economic Development (MoFPED) is preparing a tax on every cash withdrawal from ATMS or Commercial Banks. This means every time someone takes out cash from their accounts. The customers i.e. the citizens have to pay the state a fee to access their money. Just like they do with the mobile money transactions. That’s why the state is proposing this.

This is an easy way to access more funds without adding any value to the monetary market. The state will not do anything, but adding a fee. A percentage on every single transaction. In the meanwhile, they will also deplete funds from the citizens. As the citizens have to calculate every transaction to ensure they are paying less taxes. That is what people does when they want to ensure they get most value out of the money. Which will be standard.

The manner of doing this. Is in a state where there is already lots of cash and money in circulation. The Republic is built with cash based economy and need for cash itself. That is why in some ways this will even be a double tax. Especially for the ones having first mobile money transfer to family members and loved ones. They are first paying a fee to send it too them, which is the Mobile Money Tax. Then the person receiving the Mobile Money will have to pay either at a bank or at ATM the Cash Withdrawal Tax. In this way the state is getting paid twice before the money is even getting in circulation.

I wonder, if the MoFPED have thought of the consequences of this? Has the state considered the implications for the citizens? Or are they only trying to figure out new ways to cash in on every citizens. So that their behaviour and need for money will cost them.

Because, it is normal that foreigners or aliens are paying to take out money at a ATM abroad. They usually pay a transfer fee between their currency and the Ugandan Shilling. That is making sense and the bank also takes a fee for doing so. A tourist knows this and accepts it, as it is a way of easily access and securing local currency. However, what the state is proposing is paying a tax to access your own money.

The state is billing people for withdrawal of cash. In essence the state will take money for service rendered for printing money. They are billing the public for having circulated coins and bank notes. Since, they are taxing every transaction and that’s really ill. This sort of enterprise isn’t growing the tax-base, but taking away more funds from circulating. The more you tax, the more funds you are depleting from the system. In the end you have a evil circle where all taxes are overburdening the citizen. In such a manner, that they start to do all business and transactions on the black-market to save money. That is when the state loses out and cannot access these transactions at all. This because they have found other means of moving money and doesn’t want to pay added taxes on their needed funds.

The more these taxes are put forward. The more funds are taken away from the ones who needs them. This is all taken away from the citizens before they get to access the money. Either it is mobile money or taken from their account through a withdrawal. That should worry the Representatives and the ones making laws. The amount of 0,5% doesn’t sound like a lot, but imagine that on every single transaction or withdrawal. That will be huge sum and be a costly endeavour. Peace.

Uganda: Deficit financing is creating an evil circle financially [72% of revenue spent on debt repayment!]

By implication, if sh15.7 trillion for debt service-related expenditures is subtracted from the sh21.9 trillion the Government will have generated in revenue collection, it means that 72% of the country’s revenue collection would be spent on debt repayment. The committee raised concern that the high rate at which government is borrowing is not commensurate with the low level of increasing government revenue collection and, therefore, violates the country’s charter of fiscal responsibility. The report indicates that as of June 2020, Uganda’s public debt had reached $15.27b, which is equivalent to sh56.9 trillion. Out of this sh38.9 trillion is external debt and sh17.9 trillion domestic debt” (Moses Mulondo – ‘Govt earmarks sh15.7 trillion for debt repayment ‘ 03.02.2021, New Vision)

The news on how the state got to repay old loans is coming out. As the Ministry of Finance, Planning and Economic Development (MoFPED) have put forward the budget for the Financial Year of 2021/22. This is initially telling stories on the revenue or tax base, which will be preoccupied or used for paying debt repayment.

Just to put things in perspective. This is the definition of ‘Deficit Financing’:

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).

This here is telling the story, which the state media and others isn’t telling. Because, they are borrowing funds to cover up for the deficit. The deficit is created as a result of the rising cronyism and misuse of funds. These funds have to cover the bloated government and its staff. That is why deficit is created to fix the shortfall between the needed revenue and the expenditures of the state. They are using loans to cover and fix the lacking revenue of the state. If the state had enough funds through its tax-base, the state wouldn’t need these loans in the fist place.

However, the state have prolonged with this game over years. The state has used loans to cover its baseline and usage of funds. They have went out for foreign creditors to get enough funding. That shows that the state haven’t been fiscal responsible. They have misused the authority of the state and taken up loans, which now accumulate to over 70% of yearly revenue. While this is happening. The state and the Parliament is still issuing new loans and creating a bigger debt burden. That is what they are doing… and that cycle must stop.

Soon, all revenue will go directly to debt repayment. We know the state wants to have debt relief, but this is self-created by the regime, as they are borrowing for basic commodities and necessities. They are always loaning funds to build development projects and infrastructure, which will be costly. As funds are lost and misused in the building of these. That is why the price of road is so expensive and also projects in general. Therefore, the state is crewed over more than it can swallow.

That is why the state is deficit financing and its become a burden, which it cannot carry. The debt is not sustainable. When 72% revenue is spent on debt repayments. That shouldn’t be a thing, but that is fiscal policy of this regime and apologist cannot hide the fact. They have run down the state and taken up loans they cannot carry. Peace.

The NRM lacks Fiscal Responsibility!

There been so many times the National Resistance Movement (NRM) apologists and defenders have claimed the opposition lacks Monetary Polices. However, contrary to public belief or perception it seems like the NRM is failing on this themselves. It is very simple reason for all of this.

The NRM and the Government of Uganda, which is the legal entity and de facto legitimate state at the moment. Have the power to borrow, loan and get funding for their operations. They can budget and make monetary policies. The government can make it possible to inject and add stimuli to the economy as a whole. That is what is happening all the time, but it is also very important. That if they fail to do it properly. It can have dire consequences.

One key aspect the NRM and its government have failed over time is to show fiscal responsibility or balance its budgets. The NRM regime have been borrowing and been deficit financing. They are in a cycle of loans financing old loans. They are adding debt burdens to build roads, pay salaries and do basics of the state. While nothing having funds to cover the shortfall and the interests. This is why fiscal responsibility is so important.

On EconomicsHelp.org it states that Fiscal responsibility is defined as this:

Fiscal responsibility implies a government pursues the appropriate level of government spending and tax to:

– Maintain sustainable public finances.

– Ensure fiscal policy aids the optimal rate of economic growth.

– Maintain appropriate levels of public investment” (Tejvan Pettinger – ‘Definition of fiscal responsibility’ 13.10.2020).

It is very simple concept. To be fiscal responsible isn’t an revolutionary act. It is initially only spending the money you have and not spend other people’s money. Know what sort of revenue you do have and not expect a sudden miracle of funds appearing out of nowhere to cover a possible shortfall or lack of funds. This is how the NRM has practically operated.

They have needed loans for any sort of project. The NRM have tried to add their tax-base, but at the same time drained the economy. While spoiling itself and adding more and expenses. When they are not generating more natural income. The plus and minuses isn’t adding up. The state is also anticipating more loans, paying more interests and not paying civil servants.

Civil servants, the local government officials, the teachers, nurses and such needs their salaries to sustain a living. That salary pays the overhead, the food on the plate and other expenses. Some of this money will be returned back in taxes and VAT. Therefore, the state will return some of the funds.

This is why the state has really outplayed itself. When its living on borrowed money and donor grants. The state isn’t sufficiently run, when the funds dries up like this. When the state have to issue suspension of paying out salaries and expenses. Except for a handful of cronies, the army and law enforcement. That isn’t a sign of strength, but of weakness. This is basic governing.

The government who governs should be able to plan, secure and add enough revenue to able to pay salaries to its civil servants. If they are not paid? Why should they go to the office? They should be farming instead or work for a public company instead with their experience and skills. It is a waste to be a civil servant, if it doesn’t pays. The mortagage, the plate for supper and the UMEME doesn’t stop asking for money. The bills will continue to come. The landlord can knock on your door and give you an eviction notice.

That is why this is failing the basics. To not balance the budget and be fiscal responsible. It isn’t a magic masterpiece or an unbearable task. To explain what the NRM has done for years. Instead of spending within their means. They have instead been spending like an alcoholic, being buzzed drinking at the bar with no coins in your pocket, but hoping someone else is paying your tab. Peace.

Uganda: A halting economy ahead of the polls

The National Resistance Movement (NRM) and President Yoweri Kaguta Museveni, which is clearly struggling ahead of the polls in January 2021. The NRM cannot run away from the problems, as they have no overhead and isn’t fiscal responsible.

The NRM have already issued a budget of 39 trillion shillings for the Financial Year of 2020/21. They have also issued Supplementary Budgets, which has added more funds. Still, they have not covered the needed funds to expenditure. This is even as the NRM issued a Supplementary Budget three days ahead of this Budget Year and a First Supplementary Budget recently with big confidential expenditures. Therefore, the state has given itself funds and added expenditure apparently without having room to actually spend those. Because if it did.

This wouldn’t be the case:

The crisis has been unleashed by the permanent secretary to the Ministry of Finance, Keith Muhakanizi who says where things are heading, government is likely to pay salaries of only civil servants in the State House, Electoral Commission, Public Service and the Ministry for Defense. The other departments will be ruled out as non essential and according to Muhakanizi, most of the servants will be laid off till government recovers from the economic pandemic” (Emmanuel Busingye – ‘Exclusive: Only UPDF, police to receive salary as bankruptcy looms, 12.11.2020, Ekyooto Uganda).

This is being fiscally irresponsible. That the Ministry of Finance has to cut of expenditures and spending on state employees in the middle of a pandemic and an election. No matter when really… it is just wrong. It shows that they are not balancing the budgets. They are not showing responsible action towards revenue versus expenses. The state and the NRM is spending money they don’t have and which is squandered. Because, if they we’re using funds properly and had some sense. They wouldn’t be in this in the first place.

The state would not bank on funds coming from a weakening tax-base, expecting donors to bail them out and in addition expect multi-national organizations (monetary organizations) to give grants or loans. This is what the state has expected, also thought and used wrong projections of revenue. That is why they are here. If they had planned within their means and spending within reason.

It wouldn’t be cracking like this. However, the state usually have cracks and is broke after elections. Not in the middle of it. As the state needs funds to campaign and pay off political affiliates. They will give away cars, t-shirts and other things to the general public. Also, ensuring pastors, chiefs and leaders across the Republic campaigns for the President. That all costs and usually makes the campaigns expensive and breaks the bank.

This is irresponsible behaviour of the state. They are misusing their powers and their mandate. As they are anticipating people to work, but for no salary. As the state is not paying it out on time. When people have bills and need their salaries to survive. It is a dire need and the cash grabs of the cronies is eating the funds, which is needed for public servants like teachers etc. These are the ones left behind.

The NRM cannot act like its “Securing Your Future” or delivering “Steady Progress” when it cannot even carry its own expenses at times like these. Peace.

A Trillion Shilling to cover three days [A Treasure Chest for 2021 Elections?]

A fiscal year in Uganda runs from 1st July 2020 to the 30th June. What is really rare is that the Parliament and the Government gave itself a Supplementary Budget on the 26th June 2020 to cover arrears of supposed 1 trillion shillings. These funds are to paid out in the budget year and cover expenditure not hold. It is really sketchy do that so late in the budget year. As this is the end of the Fiscal Year of 2019/20 and days ahead of the 2020/21.

So in a budget of about 34 trillion shillings, the state needed another 1 trillion in the end. Meaning the budget wasn’t prepared correctly since they needed to amend it to this extend. To add yet another trillion shillings like it was nothing.

What is striking is how easy it is to adjust the cash balance, the fiscal year and the supplement budgets. These are easily voted through and the money doled on whatever. This time it wasn’t paying the water-bills of the State House. However, other random projects of the state. Which suddenly lacking funds. It just appearing right that and just right now. It was needed to be done now. In mind that it wouldn’t look to bad or be able to keep this accountable for later.

That you need a trillion shillings this late in the fiscal financial year is sketchy at best. Especially considering the implication of a new financial years just days ahead. These sort of arrears should be considered into the next financial year. If these numbers are real and have a basis. It could just be taken out of thin-air and cover whatever else the state needs ahead of campaigns and elections. These years are always more expensive and a trillion shillings for the campaigns wouldn’t be far fetched. To cover added expenses, cars for VIPs and such. Which comes with every single election.

The President, the Office of the President, State House and Office of the Prime Minister would suddenly eat more food and expand their organization. As it has to pay off cronies, new allies and ensure the electorate get a pinch of the future middle-income country. They get some soap, food and small tokens to carry them for the next four years. This is what they always do. Some even come with a few thousand or a thousand shillings as a part of the NRM Village Project Outreach, which it also does during elections.

None of the added expenses is cheap. It cost to be king. The king needs to give the public, food and circus. That is what he does and it continues the way it has always done.

The NRM, the President and the whole team passes this along. Knowing there will be no overlook or accountability over the sudden 1 trillion shilling added in the end of this fiscal year. Not like these billions here and there couldn’t end elsewhere. As long as they are voted for and can be used by the state to campaign.

The General Election is coming up and the incumbent needs a treasury chest. If there ever was one. The one trillion shillings would be helpful to run an campaign. I wouldn’t be shocked if it went missing and was used for campaigns. That would be just another day in the Republic. Peace.

The Art of Deficit Financing: Budget 2020/21

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).

What is striking from the 2020/21 budget is that its not only 45 trillion shillings, but the way they are financing this spending. Because, the budget need financing or revenue to pay the expenditure. You cannot use air to pay the bondsman. The people you owe money or supposed to spend on needs real cash-flow and liquidity to be fiscal responsible.

What we learned again is the debt deficit financing, which has been common staple in the Republic. Since domestic revenue or tax revenue is about 20 trillions shillings. This means that the rest of the budget has to paid for in various of other ways. In this regard, the state are borrowing, refinancing and gaining more debt. As the state is also wasting more of the budget on paying interests.

This is really making a evil circle and continuing debt trap. Even if the trillions upon trillions owned by the state is growing. That this still haven’t hit a debt ceiling. However, the issue here is the amount of paying interests. They are wasting away money on paying for old loans. This is what the state is initially offering. While it is gaining new debt to finance the over-expenditure today.

When the state pays 4 trillion shillings (9% of the budget) in interests. That shows how destructive this is for the budget. How important it has become. When 1 in 10 shillings of the budgets are paid in interest. This money could have been spent in all parts of society. It could have changed people’s lives and invested in the future. Instead its paying on the debt trap created by the same state.

Deficit financing and refinancing will only ensure the future generations are paying for the growing debt created by the current government. They are borrowing on the future growth and supposed revenue. Even as the state is ballooning the budgets, that they are not able to cover more than half. That is worrying and should worry the republic too.

Yes, that budgets get ballooned in election years are common. That the budgets are insincere and write of taxes in these years are typical too. All of this isn’t new. It is what happens when the Republic is preparing for elections in the coming year. Therefore, the state needs a treasure chest to bling out on chiefs, voter tourism and whatever else to look good for everyone.

That is why this budget is like this. We can clearly see that the state are continuing to acquire more debt, which means the interest payments will grow every year. This is why the refinancing and growing debt should worry everyone. Because, just like the interests payments are now at 9% or 4 trillion shillings this year. We can wonder how it will look when the grace-periods of several of loans are over and the initial price of these as well.

The Republic of Uganda deserves better, but the leaders and the ones in-charge are making it like this. They are not concerned about the future and that is very clear. As they are spending and squandering away the future today. Then someone have to pick up the tab in the future. Peace.

Opinion: Mzee wants it to BOP his way

You want another rap? Nah, didn’t think so. Even if President Museveni wants a BOP. Not a DaBaby track or anything. His just approved the US$500 million dollars to the Republic. This was reported earlier this month and he approved it on the 6th of May 2020, but stamped by the Ministry of Finance, Planning and Economic Development (MoFPED) on the 11th of May 2020.

What is unique here is that this loan is given on the idea of “Balance of Payments”. Economist would know that this to cover the deficit and the balance the budgets. This is to ensure the state has enough revenue to already cover the deficit it has. That is why grants and loans comes to ensure the levels of revenue covers the spending. This means that the state has spend a hundred dollars, but only had 50 dollars in liquidity. So, to ensure the accounts are balanced, the BOP comes in and fix the shortfall.

Museveni writes this in the letter:

The money that goes to the Bank of Uganda is for “balance of payments support”. “Balance of Payments supports” does not only mean helping the country to “import more” but must also mean helping the country to “import less” by manufacturing these products here. With this undertaking, I approve the loan” (Museveni, 06.05.2020).

Because what the support does in the instance of the hundred dollars budget with a shortfall of 50 dollars revenue. The BOP support is the missing 50 dollars and makes it zero. Meaning, the accounts and financial flows should turn into zero. That means with the budget with its expenditure and its revenue its should be a nil or zero sum game. Therefore, when the President claims this helps local industry and less imports. I don’t see it.

Especially, if this is a BOP. Because, a BOP is a fixated way of balancing the budgets, not secure more trade. Its to cover deficits between expenditure and revenue. This isn’t a magical sphere of happiness and joy. This is budgetary measure to cover the shortfalls and lack of domestic revenue. To cover expenses that appeared or was already budgeted. Therefore, the need of Balance of Payments from the IMF to cover those.

This can be seen as a Financial Inflow to cover the deficit.

Like this:

-100 dollars budget/Import

+50 dollars revenue/Export

+50 dollars Financial inflow (BOP Support)

= 0

That is why, when the man says like this. Its a game of balancing the budget. Not putting a wand on the thing and swiftly changing things. This is just a financial measure to cover a deficit. A short-term solution to a shortfall. That will not solve anything, but by time. Not cover debt, not create a market nor make a big difference. Its just covering expenditure. Nothing else.

The President can make it seem so, but that wouldn’t be a BOP. That would be another instrument and another measure. Where the funds was actually meant for investment. This is covering the basics.

Let me end with DaBaby: “I needed some shit with some bop in it (Let’s go)” (DaBaby – ‘BOP’ of KIRK, 2019). Peace.