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.

Statement by the People Power Movement on the IMF Rapid Credit Facility Announced on 6th May 2020 (09.05.2020)

Opinion: Don’t let Mzee pimp a second round of debt relief

Back in the day, President Yoweri Kaguta Museveni in the end of the 1990s the World Bank let the Republic of Uganda the opportunity to join their Heavily Indebted Poor Countries (HIPC) to cut the debt of the Republic. However, even with the massive amount of debt relief done in 1998 and later never stopped him from taking up more debt.

That is why the amount of interests paid on every single budget is debt burden, which is created by the President himself and his extensive cronyism. The President has ensured that the state owns so much money, while he stills continues the drill by financing half of it by more debt. Which has been method the National Resistance Movement (NRM) and Mzee has used in the recent years.

That is why such a big amount of funds is going into interest payments. Also, why the Republic are going in a negative spiral, while the lack of domestic revenue isn’t following the projections of growth that the state always promises.

With the knowledge of this, as the President is asking for a debt relief now. His using the Coronavirus or COVID-19. The whole world are into a recession because of this. It is the perfect smokescreen. The President had the 2000s and 2010s to fix issues, but instead the plunge the economy anyway. He just need an excuse for a bailout.

Last time it was Universal Primary Education, a empty campaign promise and now there are plenty of dilapidated schools. They played and tried to focus on it, but gave it up along the way. Because, doing this properly would actually cost time and effort. The President and his big convoy would actually have invested more, than they wanted too. More promising spending on proxy-wars, than on proper education for everyone.

So, knowing that the Multi-National Organizations, Bretton-Woods Organizations and donors gave way to the Uganda in between the late 1990s and early 2000s. They offered billions in various of schemes, not only HPIC and Poverty Eradication Action Plan (PEAP). This has been done already and still the state is bound by loans and grants to function its government. Therefore, the bullet of debt relief has been wasted.

The amount of US Dollars spent on the debt relief earlier in the reign of Museveni. The Head of State has misused this in the past. Not like he will change now. He has used the system to pimp his budgets and his wealth. His enriched himself and his cronies. While the Republic is still poor and the revenue isn’t growing like the economic recovery of the 1990s said it should have done. If the cure of the past would have worked, than the need for debt relief now would be unnecessary.

In 2020, the Republic shouldn’t get debt relief. It will be only spoils for the elites and the cronies around the President. It will be used buying tear-gas and SUVs. The WaBenzi will eat the spoils and only give away beans to the ones in need.

That Museveni says the continent needs debt relief. He means that himself needs it now. Even if his a wealthy guy in an impoverished republic. A republic he has run for three decades. Which already got special treatment and had a controlled Consultative Group. So, its not like this man hasn’t pimped the system already. He has tricked it and promised to juice up vehicle, but instead continue to run it to the ground. Hoping he could trick some new leaders to do the same mistake. Trusting him and his “high above” leadership.

They already spent millions of dollars to cut of the debt of the Republic under his control. The leadership is the same and they will misuse this if they get it again. When he had the opportunity to use it the last time. He instead wasted it and has ensured the state is more addicted to loans. That is why he hopes someone else can bail him out. While his paying ghosts, fake tenders and whatnot.

So, the IMF and World Bank should know this, but they are maybe more afraid of their image, than the result of letting go of some funds. These funds will not help anyone directly out. Only ensure the President longer life in office. This will not help the ones in need. Than he would have already ensured that. Instead his continuing this ballad and serenading the international community. While he hopes that no one knows history.

He has failed the last debt-relief and misused his chance. That is why his continued to grow the debt, addicted to grants and not created a space for more development. Unless, they give the President some handshakes at the State House. This is the way it goes.

The President of the Republic has had all the time since 1986 and we are still here. There are still opposition Members of Parliament who are tortured, there are still lack of free space and militarization of politics. That has never changed, but he hopes nobody notice. That is why he hopes he can pimp the International Community another time. He already did the trick and hope he can get them buzzed by a few buzzwords.

I know for some this is a moment of nostalgia, but for some its deja vu’. We have been here before and we shouldn’t need to repeat the same bad tune, again and again. However, I expect nobody to listen to me. Peace.

Opinion: Omonya forgot the duties of the citizens

Lawyer Rama Omonya failed in his article today in New Vision. As his trying to use the Constitution to point that there is only way to criticize the President and his actions. That the public are only legally allowed to go after the Member of Parliament. This is all because of the 10 billion shared to all MPs as part of the Supplementary Budget

Especially this part triggered me:

Our constitution does not provide the citizens with such profound powers over the executive. The social accountability mechanisms for citizens to hold the Executive accountable only come in a general election after every five years or a referendum” (Omonya, 2020).

I am not a citizen of the Republic, but can read the Constitution of 1995 myself and know there is a article number 17(d) and 17(i), which states:

17. Duties of a citizen.

(1) It is the duty of every citizen of Uganda—

(d) to protect and preserve public property;

(i) to combat corruption and misuse or wastage of public property” (Constitution 1995).

To top it all off, there is article 107(b) which states:

(1) The President may be removed from office in accordance with

this article on any of the following grounds—

(b) misconduct or misbehaviour— (I) that he or she has conducted himself or herself in a manner which brings or is likely to bring the office of President into hatred, ridicule, contempt or disrepute; or (ii) that he or she has dishonestly done any act or omission which is prejudicial or inimical to the economy or security of Uganda” (Constitution 1995).

Yes, that removal can only happen, if there is a motion from the MPs and the Speaker has put forward a tribunal for the inquiry and investigation in the allegations of the President. So, the Lawyer is right on the money there.

Still, if the citizens are supposed to follow the duty, they are supposed to be angry at both the MPs for the usage of 20 million shillings on themselves and cuss out the President for his Classified Expenditure, the State House and the Office of the President. All of these funds needs to checked and balanced. Not only the MPs, unless their duty is only to lower-ranking officials. Which the duties of the citizens doesn’t state. Unless, the lawyer can elaborate that for me?

He also wrote this: “In summary, the citizens have every iota of rights to the bay for the blood of the MPs over the sh10b and it is for the MPs to the bay for the blood for members of the executives who are mismanaging the “other” trillions as our laws dictate” (Omanya, 2020).

It’s the duty to combat corruption and misuse or wastage of public property. This is not based on where it happen, as long as it happens within the Republic. It does not state who is acting corrupt, who is misusing the power or wasting the public property. That is all fair game, if this article has value and not only symbolic. Because, Omonya make it seem that way.

Because, there is nothing stating in the duties of the citizens to only look into the Local Councillors, Mayors or Members of Parliament, but not the President. The duties are very clear and the citizens are righteous to do so. Even if they don’t have direct powers, but they can push their MPs to petition a motion for a tribunal. That would be justified to investigate the classified expenditure and other questionable use of public resources. So, there is also oversight of the President, not only in the General Election like lawyer states. Since, the duties are there as citizens. That should be fundamental. Therefore, the citizens should push on the buttons of the MPs to look into the Executive. Not only call fire for the little burning bush of 10 billion shillings, but also the trillions of shillings in questionable allocations. Peace.

Reference:

Rama Omonya – ‘Why the public must be mad with the MPs and not the executive’ 01.05.2020, link: https://www.newvision.co.ug/new_vision/news/1518425/public-mad-mps-executive

Opinion: Mzee needs about 3 trillions for secret projects [or a slush fund for his re-election]

In the next financial year it is voted in UGX 2.8 trillion shillings in the Financial Year of 2020/21. This is very special in consideration as the whole budget has grown to 45 trillion shillings. Also in regards to things and rising debts, the state will have to pay UGX 4 trillions in interests payments. That is close to 10 % and the Confidential Expenditure is close to 7,5%.

This is really special that the President needs this amount for confidential expenditure for the FY 2020/21. This is ahead of the General Election of 2021. There is already a supplementary budget for COVID-19 as well. Which is also adding more confidential expenditures too.

That is deliberate. The National Resistance Movement (NRM) and the President is acting with a clear message. They are doing it and we know it. Because, the state needs a lot of funds for the campaigns, for the tours, campaign material, paying ads in New Vision and paying off chiefs, RDCs and whatnots. That is why the President is begging for cars now. He needs them for campaign season, he always buy cars for Pastors, RDCs and other appointed officials to get their loyalty.

So, who knows what they will use Three Trillions Shillings for, but surely it will be for selfish and entitled reasons. NRM and the President will misuse these funds. Just like they are spiking up the budget again. New heights as of the budget is estimated in loans and grants. This means, the state is only able to get revenue for the other half. Meaning 22,5 trillions are gotten from elsewhere and will be more interests to pay later. This is special, as the state is getting debt relief from the IMF. Not like they playing into it. Loaning more, while the IMF is offering relief. Such a brilliant move!

While the state is doing that, they are adding more and more confidential expenditure. This is done in manner and fashion, where we know that it will got devious things. That is why they cannot state it. If it is weapons for proxy-wars. If it is for paying side-dishes, cronies and “foreign investors”. Because, there is a lot of things ahead. The President has a lot of people to pay. A lot of campaigning to do and spend like a drunk sailor in the coming months. Especially after the lockdowns.

The President will use the LDUs, UPDF and Police Force. There will be means and pain, interference and intimidation to ensure another term in office. Not like he can do it with gained popularity at this point. He cannot even get enough to feed the poor. He cannot even find ways to properly serve the public or contact trace within the COVID-19 pandemic.

That is why he needs classified expenditures in the ranking of 3 trillions in the up-coming financial year. Since, he needs secret trading, procurement and usage of funds. These things will not have ordinary due diligence or oversight. The President can use it like his Donations Programs. He can spend it without question and suddenly give a blown-up doll to his wife or something. We don’t know, but that is what he could do.

The NRM has surely ensured they have secured the State House, Office of the President and Office of Prime Minister funds as well. All of this usually spins a big web in the election time. So, expect it to be a supplementary budget for the State House in 2021. As the water-bill, lack of funds for salaries for a few Presidential Advisors and so on suddenly hits the fan. This is partly covered by the Confidential Expenditures. However, it can go anywhere. We just don’t where. It could go to ammunition, Armoured Personnel Vehicles and whatnot. That would be shocking, even if it get some additional tear-gas too.

However, don’t expect these three trillions to make the society better, the Republic to prosper. This is slush funds for the President and his cronies. This is securing their fate ahead of the election. Peace.

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