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President Museveni has directed that all Government Loans needs his “Personal Approval”!

“Parliament: President Museveni has written to the Speaker Rebecca Kadaga directing that all government loans must get his “personal approval” before they are tabled in Parliament” (Arinaitwe, 2017).

Yesterday in the Daily Monitor, all government loans has to go by and get approval by the President. So now, it is not all information relating to crisis. Neither is only the matters of grants, presidential donations or presidential handshakes for that matter. It is needless to say, more and more, if there was ever enough that has to get the provisions or the sanctions by the President Yoweri Kaguta Museveni.

If there is a street in Kampala that has damaged sidewalk, soon the President has to be involved and check his budget. Since now if the government needs loans from either internal banks, state reserves or even multi-national financial institutions, his Excellency needs accept it all.

Certainly, this will hamper any development and stop all the financial inclusions and provisions, who when you look true it all had given lots of power to the Parliament and the Ministry of Finance, Planning and Economic Development (MoFPED). Therefore, the Public Finance Management Act, which gives the government a go-ahead actually to loan without the approval of parliament. Now the President orders all loans to be levied by him. That shows his need for control and his passion to cease all the cash.

We can clearly imagine the Ministers, the Members of Parliament and the Local Councilors, all have to travel to the august house of Okello in Entebbe or jointly to Nakasero to plea a deal and get vouches for their needed bills and needed funds. Especially, considering that all State Affairs are now handled by the State House. The need for the parliament and its functions are dwindling when the President are the one that decides these details.

There are clear misconceptions of power, when all the money are under control by one-man and he does the decision. The need for a director of Bank of Uganda is only for show, the fiscal policies and needed understand of the financial markets are bonkers, when the President takes it all in his hand. More and more, the values of Presidential Advisers and Ministers are just for the effort and show. Therefore, they will not turn against him, instead of actually doing the state needed function.

This I say, since even business agreement between trade-off of banks, of estate and public lands are arrangement directly in the chambers of the State House. With investors and merry-men who promises to make gold out of bulk goods and Chinese imports. So that former markets, farms and former private lands are extorted with the benefit of the President, without concern of the traders, the ones living in the houses or the general effect of these efforts. Even the destruction of the National Theater is a prime example of a short-con to gain personal wealth on former old institution in Kampala.

Transparency and good governance, budget control and fiscal responsibly only becomes words needed when begging World Bank and International Monetary Fund for steady cash relief, or even African Development Bank (AfDB). Since it is the stakeout and possible needs of the President those matters, not the general state of schools, hospitals or refugee settlements. If the President see the need and issue or if one, of his fellow cronies beg on their knees and kiss his ring. Then the offer will be settle as a token of loyalty.

Now that the PFMA is out-done and out-played, even outfoxed if you will, because of the Presidential personal approval, therefore the parliament values is close to zero. They are just leaflets of envelopes and extra personnel for him. The parliament is more a front and piece of possible “democratic” institution when needed be, but not in reality. Since the last word and the last decision of any value comes from the State House. Peace.

Reference:

Arinaitwe, Solomon – ‘Museveni takes over loan approvals, rejects 11’ (12.07.2017) link: http://www.monitor.co.ug/News/National/Museveni-takes-over-loan-approvals–rejects-11/688334-4011990-124ocj0z/index.html

 

A look into the Oil Road Cost: the Hoima-Butiaba-Wasenko Road!

As the Budget Framework paper for Financial Year 2017/2018 in Uganda, the Uganda National Roads Authority (UNRA) requested for the roads a total of Shs. 1,779bn and the required just to build the road in this budget year alone where 1,107bn. This was seen as a strategic area from the state, as the road is seen as one of them Oil Roads. Which, is one of the most important projects the government has, as the future profits of these are soon all used before the drilling starts. This with the giant projects and the misuse of funds. This is epitome with the Hoima-Butiaba-Wasenko road! Just take a look at the reports collected on the road. But the official paper of the budget said otherwise than the framework, who was just nonsense.

While the Budget report to the Parliament of May 2017 Vote 113 UNRA Hoima – Wanseko Oil Road Shs. 29.00bn. This funds will be available after reconciliation of numbers. While the Ministry of Finance, Planning and Economic Development (MoFPED) where planning proposed numbers for the Oil Roads and the Hoima – Wanseko road where the length of 83 kilometers, and the budget was 444bn. Which is a bit more than the vote! And doesn’t fit with the records even. The numbers are staggering and confusing. As to put it further every unit or kilometers are estimated to cost 5,35bn. So the cost of the oil-road just in this budget year is insane.

Hon. Cecilia Ogwal expresses concern about the cost of the Hoima-Butiana-Wasenko oil road of shs53billion per kilometre” (Parliament, 31.05.2017). The Road that is under construction and is upgraded are 111 kilometers road. If the MP’s estimate is correct means the road cost shs. 5,883bn or Shs. 5.8 trillions. In the budget plenary session on the 31st May 2017 she was also very adamant that the roads who we’re budgeted without feasability studies should be cut and get other use of the funds. Still, that didn’t happen. One of these roads was the oil-road of Hoima-Butiaba-Wasenko. But with this years Budget report and actual feasibility study alone, proves the state will use 444bn on the road. As the other reports prove what they we’re planning to use. But this project started in 2015 and the reports of the misspending on it, seems so big as it gets. So the Road development and the Oil Road could be proof of another UNRA scandal. Take a look!

The works on Hoima-Butiaba- Wanseko road are expected to start during the second half of 2015. This is subject to availability of funding for the project,” said Dan Alinange, the UNRA head of corporate communications” (Rwothungeyo, 2014).

Hoima-Butiaba-Wasenko cost Shs. 454bn:

Works minister John Byabagambi and the new Uganda National Roads Authority (UNRA) executive director Allen Kagina have agreed to handpick a contractor for Hoima-Butiaba-Wasenko road despite an earlier petition on influence-peddling and fraud in the process. Mr Byabagambi has also changed from his earlier position where he opposed the move, when he was still a junior minister. A whistleblower had raised the red flag in a petition to Ms Kagina indicating that the project cost had been inflated by Shs66 billion ($20 million)” (…) “The 111km road stretches from Hoima to Butiaba on Lake Albert and one of the major corridors in the oil-rich Albertine Graben in south western Uganda. The project is expected to cost Shs454 billion” (Musisi, 2015).

UNRA on the Spot:

The third road project, pointed out by the whistleblower is the 55km Hoima-Butiaba-Wanseko road. According to the dossier, bids for the road were opened on January 22, 2016 and the deal was awarded to China Communications Construction Company (CCCC) at Shs 398 billion. According to the whistleblower, this would translate into $2m per kilometre, which is exorbitant. The whistleblower notes that this is way above construction estimates posted on the Unra website, which are at $960,000 per kilometre. Later, after an outcry from some bidders, Unra cancelled the deal, the whistleblower says. “The IGG should investigate the people who crafted this ignominious evaluation and bring them to book. They should even be interdicted as investigations continue,” notes the dossier. The whistleblower claims that roads in the oil sub-region of Bunyoro have been restricted to only Chinese firms because of the funding from Exim bank. Local and other foreign firms, the dossier noted, were left out” (Kiggundu, 2017).

So the prices of the budget framework and the budget report of 2017/2018, as the whistleblower of early May 2017 are clearly saying that the $2m per kilometers on the Hoima-Butiaba-Wanseko. If the US Dollars are Currency converted into Uganda Shillings which means the price per kilometers are Shs. 7,187bn, that means the price calculated by the budget and the MoFPED are Shs. 5,35bn. That means that are a difference in the price per kilometers which is Shs. 1.837bn. If the budget would be correct than the total price for the 83 kilometers, would e 596bn. I also find it strange that the UNRA budget and length on the FY 2017/2018 is 83 kilometers, as the initial length was 111 kilometers. That is also a length of roads that suddenly couldn’t disappear.

This road is surely more expensive than the government wants it to be, or certainly some lost public funds. Not shocking in the nation run by National Resistance Movement. The total tally of the cost will be revealed, but is not yet. Peace

Reference:

Kiggundu, Edris – ‘UNRA on spot over Chinese contracts’ (03.05.2017) link: http://observer.ug/news/headlines/52685-unra-on-spot-over-chinese-contracts.html

Musisi, Frederic – ‘Minister, Kagina hand-pick contractor’ (26.06.2015) link:http://mobile.monitor.co.ug/News/Minister–Kagina-hand-pick-contractor/2466686-2765360-format-xhtml-9uhqklz/index.html

Rwothungeyo, Billy – ‘Hoima-Butiaba-Wanseko road for upgrade’ (02.01.2014) link: http://www.newvision.co.ug/new_vision/news/1336203/hoima-butiaba-wanseko-road-upgrade

Uganda: Civil Society Position on Tax Revenue Measures for FY 2017/18 (21.04.2017)

Report from the MoFPED shows the growing Ugandan debt by June 2016!

Again, the Ministry of Finance, Planning and Economic Development (MoFPED) dropped another report on the fiscal policies and the fiscal health of the economy in Uganda. The National Resistance Movement (NRM) have created this environment as the growing debt and growing interest payment comes with their planned debt rise. Still, the PriceWaterhouseCoopers spelled gloom earlier in the year, as this report was dropped on the MoFPED web page today. Even if the Report was spelled out in December 2016. It is if like the NRM didn’t want this to spelled out early. Since the numbers aren’t compelling of an arts piece, more issues… just take a look!

The stock of total public debt grew from US$ 7.2 billion at the end of June 2015 to US$ 8.4 billion in June 2016. This represents an increase from 30.6% of GDP to 33.8% over the two periods. The increase was largely on account of external debt, which grew from US$ 4.4 billion to US$ 5.2 billion over the period. Domestic debt increased from US$ 2.8 billion to US$ 3.2 billion” (MoFPED, P:V, 2016).

That the debt are growing quick, as the public debt grew with US$ 1.2 billion, that the percentage of GDP went up with 3,2%, the external debt rose with US$ 0.8 billion and the Domestic debt went up US$ 0.4 billion. All of these numbers show the amount of monies that the Government are adding on their debt, as the UNRA and the development projects are suspended by World Bank. So the Infrastructure development can be questioned as the growing debt, as the government must have other uses of the growing and scaled up debt. Since the transparency of the economy isn’t there and that the sanctioned bills comes from the State House. Just look at the growing interest rates as well.

Interest Payment as a percentage of GDP stood at 2.2% as at end June 2016, up from 1.9% as at June 2015. The increase is largely explained by interest payments on domestic debt, which grew from Shs 1,077 billion in FY2014/15 to 1,470 billion in FY2015/16. There was a significant increase in the weighted average interest rate of Government debt; from 5.9% to 6.5% in June 2015/16. This followed increases in the weighted interest rates for both domestic and external debt, from 13.6% to 15.3% for domestic debt and from 0.9% to 1.2% external debt. As interest rates increase, so do the debt service obligations of Government” (MoFPED, P: 4, 2016).

The difference between June 2015 and June 2016 the percentage has grown with 0.3%, the domestic interest rate grew with Shs. 0.393 billion. The Interest rate alone went up by percentage 0.6%, as the weighted interest rates went up 1.7%. The key sentence that the report wrote and I repeat: “As interest rates increase, so do the debt service obligations of Government”.

That idea isn’t only on the interest payment percentages are running higher, but as the debt goes up, the interests goes up. So the Debt Service Obligations are going up for the Government. This is a natural outcome, that the obligations for the state goes up with the amount of debt it rises. So the government can try to portray this is controlled, and to one extent it is under control. Still, the growth in this regard proves that the NRM regime are pilling up debt and increasing their debt, as well as interests. In the end this will make the state worse. Especially knowing that the energy dams have been built poorly and many of the expensive roads haven been fruitful. This is development that the growing debt is being used to…

So the NRM regime and the Ugandan government isn’t believable… the rise of debt and interests show’s the current state of affairs. Even if the percentage is after plan, the government still has to take charge and make sure they can pay back both the debt and interests. Peace.

Reference:

Ministry of Finance, Planning and Economic Development (MoFPED) – ‘DEBT SUSTAINABILITY

ANALYSIS REPORT 2015/16’

Uganda: UPC Calls for Economic Reforms (05.04.2017)

Bank of Uganda: Monetary Policy Statement for February 2017 (15.02.2016)

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PwC report spells gloom over rising debt in Uganda!

Ugandan shillings

A report released by PricewaterhouseCoopers limited has delivered this month is clearly seeing what others has seen with the economic situation and the use of funds by the National Resistance Movement (NRM) and their regime. This report by a company which is an international company who works with other businesses and civil society organizations who needs economic advice and advisory services for taxes and such; therefore the report from PwC on economic situation is telling. Their speciality on their outlook will be saying with auditors and financial analyst whose words means a lot. They are professional analysts in this field are writing and saying this on the economic climate. The Economic climate is worrying and that has been visible. The liability of the growing debt in the republic has been a hazard together with the lacking internal revenue for the state as well. Just take a look!

Sluggish economy with higher debt:

“This bulletin comes at a very crucial time for the Uganda economy when growth is slowing down, private sector credit is on a decline, consumer demand is low, implementation and execution of critical public infrastructure projects is very sluggish, and the public sector debt burden on the economy is at the highest it has ever been” (PwC, P: 3, 2017). “If the domestic revenues collections continue to underperform, the government will be forced to borrow more from the domestic market. The increase in government borrowing may result in a substantial increase in yields on government securities, which may result in an increase in borrowing rates, which may constrain the private sector credit growth even further” (PwC, P: 7, 2017).

Growing debt:

“The Uganda’s public debt burden has risen by 12.7% in the past four years from 25.9% of GDP in FY 2012/13, to 38.6% of GDP in FY 2016/17. The debt burden is projected to continue rising to 45% of GDP by 2020. Debt as a percentage of revenues has risen by 54% since 2012 and is expected to exceed 250% by 2018. The country’s ever increasing debt burden has resulted in a deterioration of the debt affordability situation” (PwC, P: 8, 2017). “Uganda’s capital expenditures are still too reliant on external finance. Currently debt servicing constitutes 11% of the total government expenditure, one of the highest debt burdens in sub-Saharan Africa. This is expected to increase to 16% of the total government expenditure by 2018. Uganda’s debt burden has risen faster than the government’s own resources, resulting in a debt-to-revenue ratio of 236%, one of the highest amongst B-rated countries. This has prompted Moody’s recent down grade of Uganda’s long-term bond rating by one notch to B2 from B1” (PwC, P: 8, 2017).

An Economy with challenges:

“2016 was an economically difficult year for Uganda. The economy faced numerous challenges due to the continued uncertainty surrounding the recovery in global economic growth, weak commodity prices and geopolitical events in our key trading partners. As a result, of these numerous challenges, our export earnings, FDI flows and remittances to Uganda all went down. These developments, together with a slowdown in the execution of public investment projects and weaker than expected private sector demand, had a major effect on the economy” (…) “Other internal risks include delays in the implementation of public infrastructure projects such as the Standard Gauge Railway (SGR) linking Uganda to its East African neighbours, and the key infrastructure projects critical for the commencement of oil production” (PwC, P: 4-5, 2017).

If you are worried by the Republic and their economy after this, than you haven’t followed the class since this signs have been there for while! The state of the economy is fragile and the debt rise should concern all the ones inside the Republic and also outside. However, this could change, but that has to be done by the government and steer in another direction as today. The greed and the common sense of developing the economy is forgotten, as they are fixated on infrastructure projects and oil developments, while borrowing to fill the losses of donor-aid and internal revenue. This could be done in many ways, but that would not be easy. Peace.

Reference:

PricewaterhouseCoopers Limited (PwC) – ‘Uganda Economic Outlook 2017’ (February 2017)

Opinion: Ugandan Government rising debt levels, brings fear of higher inflation, devalued currency and defaulting on the debt!

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Well, an election year and campaigning as a tyrant and dictator cost, the fortunes splashed on fellow peers and citizens to buy goodwill costs. The price usually happens after the splash funds on villages and on buses. The estimated exhaust of funds and State House can strain the economy. Therefore after elections in the past there been rising food-prices, more expensive oil and gas and other needed imported goods for the average citizen.

This is happening as the donor-community doesn’t have the same faith in the Movement or the President that been there since 1986. His longevity is now hurting him, as his tricks of trade isn’t building steady progress, instead he is using up every single allocation to make sure the loyal servants and movement peers are paid-in-full, even as his own party haven’t paid salaries for months. There are rumours of how the Special Force Command with Maj. Gen. Muhoozi Kainerugaba has gotten their salaries received as much there are questions of the government bailouts of the friends and business-mates of Gen. Salim Selah.

Still, the economic problems continue to arise, the ill-minded would say there hope of wealth, but the lack of transparency, misused funds as the Uganda Revenue Authority – Oil Money scheme and other’s prove there are lacking accountability for how the government funds are spent. This with the knowledge of the lacking salaries to teachers and even Local Government funds that are spent without concern of showing where it got spent; all these activities doesn’t give confidence and trust between the stakeholders and citizens.

With all of this in mind the revelation that the growing debt are now eating too much of government spending, as the arising splashing of funds to civil servants are happening; the reports from Bank of Uganda (BoU) isn’t a beautiful fairy-tale, instead it is doom.

“In its state-of-the-economy report for December 2016, BOU said: “There are also perceptions in the market that Uganda may not be able to service its rising debt levels.” (…) “The central bank said external debt has grown rapidly and, on a commitment basis, is now estimated at $10.7bn as at end of October 2016. BOU said: “A lump up [in] infrastructure investment has contributed to a rise in our debt portfolio in recent years.” (…) “Uganda’s public debt burden has risen by 12.7 per cent to 38.6 per cent of GDP in 2016/17 from 25.9 per cent of GDP in 2012/13. BOU says it is projected to continue rising towards 45 per cent of GDP by 2020” (Mwesigwa, 2017).

Highlights on the 2015/16 budget (New Vision Graphic)

Highlights on the 2015/16 budget (New Vision Graphic)

That the Movement and the NRM are not able to service their debt, is an indication and will also create a problem with the banks and multi-national financial institutions that has offered these loans to help the government with the day-to-day operations of a sufficient government, as well as offering loans to promising infrastructure projects. These all are now in danger of defaulting loans. These levels are estimated to become 45% of the income of the Republic, which is not the sign of riches; more of poverty and mismanagement. The Executive that has been leading the nations for the decades have seen the signs of the wall, but instead of telling the truth; he has promised industrial revolution and amazing progress that would be bigger than when the United Kingdom found out how to earn money on the Steam-Engine. The same kind of promises to become a middle income nation, when your debt burden is arising as rapidly as it is doing now.

This should be worrying as the Movement has revealed and gotten released plans for own total production and releasing own notes, that could also increase possibilities of devaluing the currency, this with growing debt can create a hyper-inflation that only his fellow comrade has been able to create in Zimbabwe. That is the worst case scenario if the bank-notes production gets out of bond to sort of make quick fortunes for the Movement.

The Movement has all their days used any kind of acts to get monies for themselves and hide it away, only when gotten public they needed to have inquiries and detain the ones that not kingpins, but the low-level employees that doesn’t hurt the leadership. Therefore the concern of not a fiscal well-thought monetary policy, as the Movement are more settled on building projects without having to have giant loans from Multi-National Monetary lenders like IMF; AfDB and others. These loans has to be paid back and also with interest. As the Government bonds has also lost their track compared to the need of sufficient funding. These institutional defaults and as well with the lack of clear conscience of the use of funds, shows the Movement has to step up their game if they don’t want their currency and their budget to lack funds for the coming budget year.

The growing loans will also stop the amount of absorbed funds in the republic goes down as the government has to use bigger parts of the resources on loans, as the extended collected funds from URA might have grown, but they are not collecting enough to keep up with the debt. If so they wouldn’t have defaulted and probably would have paid their interest and debt rate as promised when they we’re accepting taking on the debt.

Time for the Movement and their regime to charge, change patterns, their eating as much as they can, but they will leave the next one with a huge bill of no-confidence, while their short-term riches will be spoiled and devalued as the coming depressing economic stability will not give the market and the currency the needed trust as it should has a tool for exchange values between two parties. Peace.

Reference:

Mwesigwa, Alon – ‘CENTRAL BANK WARNS ABOUT RISING DEBT’ (06.01.2017) link: http://www.observer.ug/business/50631-central-bank-warns-about-rising-debt

Bank of Uganda: Monetary Policy Statement for October 2016 (18.10.2016)

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World Bank Statement on Withholding New Lending to Uganda (13.09.2016)

 

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UGANDA, September 13, 2016The World Bank Group took a decision to withhold new lending to Uganda effective August 22, 2016 while reviewing the country’s portfolio in consultation with the Government of Uganda.  We continue to actively work with the Ugandan authorities to address the outstanding performance issues in the portfolio, including delays in project effectiveness, weaknesses in safeguards monitoring and enforcement, and low disbursement.

We reiterate our commitment to doing everything possible to work closely with the Government of Uganda, as well as with other stakeholders, to support the country’s development and ensure that all World Bank-supported projects deliver tangible and long-lasting results to all Ugandans, especially the poor and vulnerable.

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