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Archive for the tag “Ministry of Finance Economic Planning and Development”

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.

Opinion: RDCs getting cars isn’t governing, but a cheap trick!

The Minister for Presidency, Esther Mbayo has given out 65 cars to Resident District Commissioners (RDCs) from different regions to improve on service delivery. The RDCs who received the cars on Thursday constitute 50% of the total number of Resident District Commissioners currently deployed in the country” (Muhamad Matovu – ‘Minister Mbayo Gives 65 Cars To RDCs From Different Regions’ 22.11.2019).

There are 135 districts, which is operative in the Republic. This is November 2019. There will come more districts in 2020 and so-on. As the Republic is made into smaller and smaller units as political favours and for personal gains of the political elite. That is well-known, as well as a measure done to establish good grounds of new constituencies with no voting history ahead of any given election.

With this in mind, there is an up-coming election in 2021. It is not the first time the National Resistance Movement (NRM) run government have given cars to its officials. They are not only giving that to the MPs and the cabinet, but also anyone in association with the State House. Therefore, the State House and the Parliament should have a car-lot and a car-dealership, if they were supposed to run it smoothly and cheaper.

Because, back in 2015, the state bought 111 cars for District Chairpersons. Therefore, this sort of enterprise happens on near-regular basis. Just as the state bought cars for the CPC in Parliament in this calendar year. So, this is a business the state knows and deals with a lot.

The special thing about this, is that service deliver is important with a car. Not with a mandate or actual factual work that the RDCs do. The Residential District Commanders, the ones overseeing and oversight of the government works in the districts. This is 65 cars and in total, that is 50% of the appointed RDCs. This means there is 130 districts who has RDCs by what the Mbayo states. That means the state lacks funds, manpower and appointed leadership for 5 districts alone. Which is a rare move.

The President has the opportunity to give broader mandate, to give funds and opportunities to the RDCs to actually do more. But thinking a car would make a big difference is naive. As they have the same mandate, the same lacking structure and weak local government. Just today, the President and the state gives state officials cars, instead of building viable institutions.

The state is acting like a car dealership, not a governing institution nor following up on obligations in the districts. This is a cheap ploy for poor districts, for lacking funds and for not investing in all the created micro local-government units, which is now 135 districts and so-on. Where the RDCs and others has supervision and mandates to work. Therefore, there should be more than cars and more than a quick fix, which this is and nothing else.

To buy 65 cars will not fix the districts, it will only give for a short amount of time, mobility for some few persons in association with the RDCs. It doesn’t make the roads being built, schools being furnished nor town halls run properly. That is done over budgets, policies and actual governing being done.

To govern is an art and giving away cars isn’t building a nation, it is only cheap fix. You don’t give an alcoholic an beer, you take them to rehab and stops the availability to beer. Instead, here the state gives another beer and hope that it doesn’t catch on. Sooner or later, these cars will have a breakdown. As the cars are hit by driving miles upon miles every year.

Therefore, this isn’t it. Other than a rundown, over used idea, which isn’t scratching the surface. Peace.

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

President Museveni letter to Hon. Monica Azuba Ntege – Ruling out external or internal borrowing for development infrastructure (18.09.2019)

Another look into the Oil-Road Cost: “Package 2” Hoima-Butiaba-Wanseko Road!

In the newest report of Oil Roads, which is expected to borrow funds for. The China Exim Bank is supposed to be provider of 85 % of the cost of the operation and building of the roads in these projects. I will only look into one of them, as I have previously looked at this significant one.

This is the Hoima-Butiaba-Wasenko Road. A project that was supposed to start in 2015 and was clocking in funds from the state budgets in 2017. Back in 2015, the road was estimated to cost $126m USD. Today, with the recent report, the same road is costing $179,538m USD. That is jump of nearly $50m in a five years time. In addition, of these bloated funds, 85 % of it will be loaned from China and the rest 15% covered by the Government of Uganda (GoU).

In 2017, this project was designated the China Communications Construction Company (CCCC), which signed a deal in January 2016. However, by the time of the report 2019, it is another Chinese Company who has the contract. This is Chongqing International Construction Corporation (CRC) Ltd. With the recent contract, the loans are clearly getting direct back to the Chinese, as their corporations are the ones with the contracts to build. A clever way of borrowing and then getting returns.

With this mind, we can see the changes, see over the years how the price has changed. If Members of Parliament was afraid of the price per kilometre in the past. They should be now. As the changes of price on the same project has changed significantly. There is no doubt, that the Chinese government are getting added loans on each of the packages in this deal. As this is just one of the roads in question.

This is 111km is now costing 659,921,964,460.17UGX in Ugandan terms or 659bn shillings and that equals to about 5,9bn shillings. Therefore, the prices has sky-rocketed and the price per kilometre is abnormal and extremely costly. The overpriced asphalt and the consultation is in absurd levels. The previosly estimated price for this road was about 444bn shillings. Therefore, we can see rising price between the years in both currencies. About 200bn shillings growth in 5 years. 

To many cooks and too few ingredients. They are boiling soup on nails on this one. Wonder how this will end. As I felt in 2017, that the pricing of this particular road was a bit too much, but now they have just escalated it.

We can wonder whose eating, but someone is. We just don’t know who, because there been designated funds to build this one in the past and it has still not commenced. Surely, this road will be built, but at what point. However, with the added loans, the pressure should be on. Also, to secure the oil so it makes financial sense too. That the added value is there. It got to be. Because this project is over the top. This is the real OTT service, paid for by the Chinese and the tab is all taken by the Ugandans. Peace.

Uganda: Fresh report states that the debt-service has grown 129% within one financial year!

 

The Republic of Uganda’s economy is really reeling, it cannot be sustainable as the Government of Uganda is growing their debt like there is no tomorrow. While the fiscal growth is substantially lower than their rate of debt-service. As the growth of debt combined with lacking growth to substantiate the shortfall.

In addition, with the knowledge of added expenses, growing shortfall of funds in the upcoming Financial Year of 2019/20 and the election year of FY 2020/21. There will be more add-ons on the need for debt service, as the state already had loans outstanding, which the grace period ends and the debt-service begins on. Therefore, the amount of loans will transpire even more, than what is in this report. The endless cycle of debt and growth of it, is worrying, as well, as the state thinks that the magical wand of oil-money will clear this debt. Even as the first operational oil field and such has been postponed yet again.

Just look!

“The total Government of Uganda external debt service by end of FY 2017/18 amounted to US$275.75 million, which was an increment of l29% compared to US$120.62 million in FY 2016/17” (…) “Debt service of Uganda’s external debt is on the rise and outstripping growth of the country’s income, currently at 6%. This poses risks for future debt repayments, especially as the country continues to acquire external debt at less concessional terms, especially to finance the oil development programme” (P: 6-7, 2019)

“It follows that as interest rates increase, the debt service obligations of Government also increases. The rise in external debt interest costs attests to the fact the government is increasingly contracting non-concessional debt, which will increase the repayment burden” (P: 24, 2019)

“However, this may not be the most likely scenario, as most projects have been discounted and some excluded in the macroeconomic framework. With the development of the NDP III, additional project and other pipeline project related to the oil developments and other infrastructure, will increase the financing requirement of government in the medium term. The inclusion of the above projects will re-classify Uganda from low risk of debt distress to moderate risk of debt distress or high risk if the export shocks materialize. A downgrade would have significant implications for the program with the IMF, where Uganda’s credit risk rating will worsen; implying that accessibility of nonconcessional financing will be limited. This will limit credit to Uganda to only concessional and grants financing.” (P: 28, 2019)

You don’t need to smart about it, as the state has bigger budgets with higher shortfall in the economy, combined with debt service and higher interest payments on the growing amount of loans. You know sooner or later, the economy will tank, as the fiscal responsibility is taken for granted and that fresh funds are lacking, because these are taken out of the economy to finance the payments of the old debts. Instead of generating growth and actually naturally grow the economy, by spending and investing as a state. The money is taken away to service debt, instead of building the state. That is what they are doing and at a alarming rate. Peace.

Reference:

NEC1-19 – ‘REPORT OF THE COMMITTEE ON NATIONAL ECONOMY ON THE STATE OF INDEBTEDNESS, GRANTS AND GUARANTEES’ June 2019, Parliament of Uganda

Uganda Peoples Congress: Caution on Coffee Bill (17.07.2019)

Opinion: BoU and UTL share the same sins, just different institutions

We can lie to ourselves, we all do it now and then, and even the most holy of us does it, but acts like saints. Nevertheless, the realities are hard-hitting and not as people tend it too be. In the recent days, there been steady scandals in two institutions connected to the government of Uganda. This being the Bank of Uganda and Uganda Telecom Limited. Both whose place is vital and both under “ownership” of the state.

They have very different roles in society, as one is the Reserve Bank and the one that follows direct guidelines of the Ministry of Finance, Economic Planning and Development, while the same Ministry owns the other! That is why there are some of the same aspects, as the stories are pouring out.

The BoU is rocked by lack of due diligence, lack of minutes, lack of working after protocol and procurement. The UTL is lacking leadership, lacking structure or even basic control from the state. Both is run by the MoFPED and still has the same issues. It is like they are two ugly siblings and none of these bastards can get a date.

The BoU is the epitome of corrupt behaviour from buying pens, securing quick-fix funds for trading commercial banks and so on. While the UTL have shady-back-door deals with willy-nilly abroad in Mauritius or Nigeria, even some skeletons in Libya. Still, even if Hon. Evelyn Anite tries every avenue and use all parts of the dictionary, she still doesn’t have the powers to sack the ones running UTL, because the MoFPED is involved and who knows how the President Museveni micromanages these state owned enterprises. Since his known for guidance everywhere in the Republic. That is why Hon. Anite had to send a letter to him to further her cause in the UTL saga.

We can lie to ourselves, but not that it does any good. At this point, the involvement of the state, the known actors and only the small-fries are getting caught. The ones doing the heist, doing the handshakes and getting the kick-backs from there is working directly with the State House. That is well known and not unknown, they even ask permission before doing so. This is what they do. Its only the ones who doesn’t ask who ends in the files of various departments fighting corruption. Even if they end up there, they might lose the paperwork or minutes before investigation, as the loyal subjects clear the house. So, that the big-man on top, doesn’t get humiliated.

This is just what is up and what is going down. These men who runs these SOEs are allowed to what they do, because the higher power let them do it and they are all eating. Especially, when the “high above” sanctions it, its all cool, but if he doesn’t get a cut; than there is an issue and someone have to pay. That is the end-game, that is why it continues and why it floats like this. Not because this is a healthy practice or even a way that the state should govern, but this is what they are known to do.

The UTL and BoU have similar issues, they are doing similar acts, but with different enterprises. We can act a fool, but that will still not save the face of the ones running it. Sooner or later, someone will fall on the sword of their master. Right now its not needed, but when these two institutions needs a boost of confidence, someone will swallow their pride and do their last act of mercy. That is just how it goes. We just don’t know who will fall and for what cause, other than saving the high above from humiliation. Peace.

Bank of Uganda Scandal: Printing lies and printing money!

Well, we are at this point and time, where the printing company have back dropped their information to the public. As well, as the ones in charge of spin control in the state, this being Uganda Media Centre, as well, as the Police Force itself plus internal statements from the Bank of Uganda.

While the Directors are under scrutiny, the spin is out of bound and showing that they are trying to deceive. That the Bank of Uganda had a scheme going on with the shipment of bank-notes, where the high ranking officials could eat of the spoils, but somewhere, somebody tipped the authorities off. Because someone didn’t get their cut.

That is why the state and Bank of Uganda is trying to back peddle it, while the State House, CMI and others are investigating the efforts of transporting the extra consignment of notes. The billions upon billions of extra funds.

We know there was a scheme and that it wasn’t supposed to get to the headlines, that they wasn’t supposed to fight over notes in mattresses, neither fight over blame either. The Bank was supposed to get these, share the spoils and move along like nothing. That is why the spokesperson for the government pins blame on police, while the Bank says its nothing and the Police says its investigating it. While the new Unit in State House confirms the raid on the bank. Surely, it is all a mess, as the institution and the state itself cannot configure the story, nor the procurement of the extra consigned notes. It is like a gift that keeps giving.

We know now that someone ordered extra notes from Europe. Someone had arranged it to happen, the planes with the notes was scheduled and the transfer was already made by the officials in the bank. The State let it happen and let it even come through customs. The state let the BoU do this and didn’t stop it. Until someone tipped off State House, as off they weren’t properly informed or getting their cut. Therefore, they had to cut it off and send a sign, that they are supposed to be informed of this and get their piece of the action.

That is why the Bank was early stating it was negotiating with the authorities, that it wasn’t a raid, even if the State House, CMI and others claimed it was. We can surely see where this is going. This a badly written novel, even a badly written scheme of soldiers of fortune, of financial mercenaries who couldn’t even pocket the funds without ghosting the procurement. They had to leave breadcrumbs and leave traces of deception.

That is why the Bank, the Police and the Uganda Media Centre, all look like fools. The directors, the consignments and the delivery is all there. The ones who was supposed to earn on this was there too. The whole operation was in session and the class was about to start. But was pre-emptively stopped by the authorities and since then, the people looking at it cannot keep their stories straight.

Time will tell, but this is looking like a heist, smelling like a heist and acting like a heist. Even if they are trying to conceal it. Someone got hurt that they didn’t get their pieces of silver and had to blow the whistle. Now, the ugly truth of the operation is peeled off, layer by layer. Peace.

Another day, another Bank of Uganda Scandal!

The Bank of Uganda has had their magical pens, they have had their crazy foreclosure of Commerical Banks and now they are procuring and producing banknotes without proper function of the state. This is inside trading and kleptocracy to another level.

The Bank of Uganda is already showing their acts, as they didn’t minutes to closure of a bank and not even following protocol doing that. In the same regard, surely there was no minutes written when the high ranking officials fixed and gotten specialized transport plane filled with billions of Ugandan shillings in freshly minted banknotes.

We know this is a game been missing and sudden death is coming quickly. Because this is a rotten institution to the core. There been proof over a long time, but with every scandal, there are meat to the bone. It is ready for a stew or barbecue.

This bank has been like this under the Presidency, ever since the cross-over of the double digits in 1987 and cut of 30% for the clients using it. This is how they do. The Bank of Uganda is the reserves and the securities for the regime. They do not care how they clear their tab, but the bank will fix it.

If the public cannot trust the inner-circle of the Bank. Who can trust it? Since the BoU is supposed to be the institution that ensures the currency and the economy together with the Ministry of Finance, Planning and Economic Development (MoFPED). They are supposed to deliver what the state needs and secure the economy together. These two institutions are supposed to be the bricks to secure the foundation. Instead, we are questioning one, that breaks down the bridge of trust. So, there is no possibility of crossing that river.

The Bank of Uganda has again come into trouble. Not that its shocking, been a minute where the bank was off the hook. But now the state is trying to fix it without arresting the ones doing the illegal deeds. Surely, these people will be off the hook and off the books, just like their mission was supposed to be. For some reason, the state want to reveal it and surely to embarrass someone behind it. Don’t expect them to spend time behind bars, because these people are connected with the kitchen cabinet and the high above. Since, if the BoU was really in trouble, they wouldn’t have gotten away with their previously done deeds. Therefore, there is more behind closed doors, than what we know.

The Bank of Uganda is in another scandal. It is not strange. Its anticipated, this bank is made to the fortunate and the ones in the inner-circle. The rest just got to beg for mercy. As long as this regime is in power. This will not change, because this not profitable. But as long as it is… it will keep up and the leadership will continue. Since, the President trust them and knows they are carrying water for him. They are getting a cut for doing it too, as long as they are not telling the public.

That is why this latest is a leaked story to get rid of a inner-circle dude, who the leadership doesn’t like or trust. They feel he cannot be one of them and need him to humiliated. The President knows this, the Speaker knows this and the Parliament knows this too. However, they will not say it.

The Bank of Uganda is rocked by another scandal and its not shocking. What it was that it wasn’t bigger and more people getting a cut. It should have been more of the big-men connected with a piece of the trade-off. Because, they didn’t get it. They had to blow the whistle, then it wasn’t acceptable. Peace.

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