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

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

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

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

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

Feel my body gettin’ cold, oh, so cold

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

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

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

Here’s the quotes:

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

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

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

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

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

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

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

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

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

Opinion: Keith is in 2 billion pickle shillings

““As you are aware on the 28th February 2020 this Ministry transferred USD 600,000 to the Uganda mission in Beijing to support the affected students,” Keith wrote in a letter dated March 10, 2020. “However upon receipt of the cabinet extract, we noted that there is discrepancy between the amounts therein and that stated in the letter from Ministry of Education and Sports.” The letter directs the accountant to return 538,200 USD (1.997 billion Shillings)” (Edge.ug – ‘Uganda erroneously sends Shs2bn to students in China’ 11.03.2020).

Someone has had a bad ending of February 2020, maybe the Ministry of Finance, Planning, Economic and Development (MoFPED) Permanent Secretary Keith Muhakanizi suddenly seen the boo-boo done by someone. There was someone who didn’t due their due diligence, when the state signed off the amount of money sent from a government account over to the Chinese Embassy.

They clearly don’t have the protocol of two people checking the accounts, if they did then one brother would call out the other one. The second brother would say, “hey man, isn’t that more than what where supposed to go there and isn’t this wrong, sir?”. The Permanent Secretary Muhakanizi should clearly implement this. So, that two people have to sign-off transactions made on public accounts, because then they might save the humiliation of letter writing to a embassy asking for the return of the added US Dollars.

This is why you have check-points on spending and especially government spending. Since, this is money that supposed to be spent on the public and services made for the citizens. If this is for diplomatic work, help citizens and such. This is why, the transparency and the accountability is so important. That tenders, transactions and procurement done by the government and its organizations are done properly and through standards. However, we know that is not the case.

The person behind this transaction, surely has signed it off somewhere. They tend to be imprinted on the accounts, the rights to send or transfer funds and has put in the documentation to do so. That guy should answer for this. The Permanent Secretary looks like a dumb-dumb, but it might be either someone higher up the food-chain or a knuckle-head down in the Ministry who messed up. Nobody caught a whiff off it, until they saw their account had less shillings in it.

However, that is also a scary thing. Considering the 11 days it took to catch up on the movement of the unaccounted funds. The massive load of 2 billion shillings gone missing. It had a destination, but surely not intended there. MoFPED surely needs new guidelines and mechanisms to stop this. Unless, they are doing more of it and it doesn’t go public. Like a new type of Presidential Handshakes and kickbacks for public servants. This is why, the MoFPED doesn’t have the security checks before any transaction from the public accounts. Peace.

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

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

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.

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