Opinion: 2 Trillion shillings is suddenly needed to cover the deficit

A letter dated to the 7th November 2022 by the Minister of Finance, Planning and Economic Development, Matia Kasaija was leaked titled “Request for Proposal to Finance the Government of Uganda Budget for the FY 2022/23”. In that letter, the Minister is specifying the needs to borrow €500 million euros. When you convert this to Ugandan Shillings it ends up being 1,957,704,000,000 or about UGX 2 Trillion Shillings. That’s a lot of money that the Government and the MoFPED needs to borrow.

This is the definition of deficit financing. The cycle of bad loans in combination of lacking domestic revenue. The only way to be able to cough up funds for the short-fall in the short-term is to add additional loans. So, the cycle continues, the state take one loan after another. Loans upon loans to cover for the old loans. While also borrowing more money to be able pay expenditure and government expenses.

That’s why the idea that the MoFPED is asking for this now isn’t surreal. It is the bleak reality and the misfortune of a bloated government. The government has to many entities, to many representatives and a local government structure, which is too expensive. Expensive in the sense, that the government cannot foot the bills and don’t have the revenue to carry the expenses. That is living lavish and someone else is picking up the tab.

We already know the state is running out of loss, when the budget was forecasted with a huge leap of faith that grants and such would cover about 40% of the budget. That is telling and it’s really showing the lack of it when the state this early in the Financial Year needs another 2 trillion shillings loans to cover it’s expenses.

The MoFPED wouldn’t call for this loan and at these levels… if they didn’t know there was a short-fall or a lack funds. There is deficit and that’s not shocking. It is just worrying that it’s happening at this extent and is so normalized. While we are seeing the 11th Parliament is following where the 10th Parliament left off. Accepting loans after loans on development projects and other additional expenses, which only creates a huger debt-burden down the road. These roads or infrastructure projects has to be covered and they are not money generating enterprises. Therefore, the cost of doing it will be ten-fold in the long run. Especially, when you don’t have money for the upkeep or the ones doing the day-to-day works on it.

That’s why you know the latest revelation of this loan is just concerning. It is not a winning bargain, but a proof of mismanaged and lacking progress. When the state cannot sustain itself or be able to get a tax-base to cover these expenses. That’s because the state is wasting funds on paying for old debts and interests, which are far over the grace-period. Peace.

Opinion: The PDM seems like a failure from the on-set

Only 3,200 out of the targeted 10,594 Saccos have been cleared to receive Parish Development Model (PDM) cash after meeting requirements as outlined under the implementation guidelines, the government has said” (…) “Ms Nabbanja said all the ready Saccos are to receive the funds directly to their bank accounts. The government has so far released Shs80.92b to cater for the first quarter, while Shs1.05 trillion was earmarked as revolving funds to the PDM Saccos in this Financial Year 2022/2023. During yesterday’s meeting, the premier approved disbursement of funds to three Saccos from Otuke, Butaleja and Lira districts as model Saccos” (Peter Sserugo – ‘Over 7,000 Saccos miss PDM money’ 12.10.2022, Daily Monitor).

The latest news that only one third of the SACCO’s are able to receive partly the Parish Development Model (PDM). The Government of Uganda has made the PDM the biggest development investment and is the biggest programme after the 2021 General Elections. This follows several of other micro-financing schemes, which haven’t delivered.

Now, after Parliamentary Reports and investigations into the PDM. There has been revelations already that the SACCOs, the local governments and everyone who was about to be involved in the PDM wasn’t prepared. So, it’s not shocking that only a third of the SACCOs are able to reach on time.

This is a rushed enterprise, where the state and the high ranking officials has pushed it through without having it all coordinated from the top to the ones down in the hierarchy. That’s why when Prime Minister Nabbanja is today disbursing funds. There is a lack of totality. This because of the warnings, which previously mentioned hasn’t been regarded.

The government haven’t prepared or didn’t consider the implications of it. That’s why later the Ministries and the high ranking officials had to make procedures for due diligence and for some sort of oversight. Though with this sort of disbursement, there will most likely be mischief and be misgivings. It is bound to happen. The mere scale of it and the possibilities are endless.

While the PDM is promised to be a game-changer, it will only end up in the dust-bin of time. The writing has already been on the wall and this sort of operation isn’t making it better. Today just shows again how it’s failing. I cannot wait to read new Parliamentary Reports about these disbursed funds and how it didn’t go where it was anticipated. This is bound to end in tears and tragedy. Not because I want to see it, but for one simple reason.

The PDM wasn’t prepared or regulated properly before the government launched. When you do that and with such vast funds. It is bound to be painful. The proverb of “missing funds” is an upcoming theme. The funds will not cause a massive change or be significant to be substantial in any manner either. It might change some lives and ensure their livelihoods. However, in the grand scheme of things… it will not revolutionize the economy or the financial markets. That needs another breed and more robust financial mechanism, which does various of things and not move money from one account to another.

There will be more about the PDM in the future. Just like there been revealed the fallouts and the failures of Emyooga, Operation Wealth Creation and all the similar micro-financing schemes from the government. It is just a creature that is bound to die. We just don’t know when to have the funeral or when the sing the psalms of David. Peace.

Opinion: The PDM is set to destroy the parastatals supplying Coffee and Tea Seedlings…

Rt. Hon. Speaker, as you may be aware, up until FY 202l /2022, Government policy has been for Uganda Coffee Development Authority (UCDA) and National Agricultural Advisory Services (NAADS) to procure seedlings from certified Coffee and Tea Nursery Operators. However, Government has since decided to transfer funding previously appropriated for procurement of seedlings from UCDA and NAADS to the Parish Development Model (PDM) starting this FY2022/2023” (Statement to Parliament on the Supply of Coffee and Tea Seedlings, 22.09.2022).

The latest revelation of the Parish Development Model (PDM) will by this Financial Year takeover the powers to buy Coffee and Tea Seedlings, which has been done through the UCDA and NAADs. We know that similar activities was also in the past done through the Operation Wealth Creation (OWC). Though through those schemes wasn’t delivering the quality or the promised needs of seedlings at any given time.

When we have seen how the OWC and NAADs has failed in this. They are now putting this in the hands of the PDM and the Secretariat, which isn’t even prepared to do the basics of the PDM. The PDM is supposed through SACCOs and through the Local Government ensure Parish SACCOs get’s microfinance loans and funds, which is supposed to help development. However, the authorities, the local leadership and republic wasn’t prepared for it. As it was launched ahead of the polls, just like Emyooga, OWC and now the PDM. This is new minted schemes to be a “trick” to be the “silver bullet” to end poverty, but it ends up in nowhere.

Now in the middle of nowhere is the coffee and tea seedlings. Which are now transferred to an entity that cannot even do it’s core. Money is wasted, money isn’t received and we are certainly hearing about “missing funds” soon.

So, an organization that has been rushed, lacked funding and procedures is taking over something so vital for the supply of seedlings for the cash-crops of coffee and tea. That’s significant and shouldn’t be showed under the rug. This is a move to stop accountability and control of it. As we know the Republic is already under scrutiny with the Uganda Vinci Coffee Company Limited (UVCCL).

It’s just iffy that this happens now. That seems fishy to me and it seems coordinated too. This is clearly taking away power and making the UCDA meaningless. Only a place to put some loyal cadres and giving them a pay-check, but having little power or oversight since the PDM and UVCCL will have monopoly. The farmers just have to produce and the Republic will take care of the rest. This is from seedling to the refined product.

They are even taking away the little powers and ability the UCDA has and doing this is shady. That’s why they are giving it to the PDM, which they know have to much on its hands. This isn’t strengthening the agricultural development, but making another scheme within the scheme. To fit another scheme they have already made. The PDM is now becoming a part of the UVCCL. That’s really interesting move and just shows what the National Resistance Movement (NRM) does at this point.

No one should be shocked, but they should be worried about this move. This isn’t done to make the cash-crop more profitable or better. We know how the OWC failed with the procurement and logistics of seedlings. Do you really think the PDM will be any better? Who are they trying to fool here? Who is the ones who are losing and are the party they are crushing?

Because, there are parties, companies and co-ops that are hurt by this. Since the PDM is taking over and there should be outrage over this. Like the NRM and the Government didn’t learn from the failure of OWC. That’s what is striking… and just shows that it doesn’t care. While it could be a scheme to fit the UVCCL and that makes it even more disgusting. Peace.

Bank of Uganda (BoU): Government has not failed to pay Bank of Uganda (20.09.2022)

The Government own 11 trillion shillings to the Bank of Uganda [and out of that 3 trillion shillings in advances from the last financial year!]

The National Resistance Movement (NRM) are ruining the economy. They have a deficit financing that is revealing to deplete all funds and all sources of revenue. That’s why in the Leader of Opposition statement published on the 13th September 2022. The Leader of Opposition Mathias Mpuuga MP in his statement is showing a staggering issue of fiscal nature.

The Government of Uganda (GoU) or the National Resistance Movement (NRM) are now owning 11 trillion shillings. Out of those 11 trillion shillings, there is 3,03 trillion shillings it got in outstanding advances in the Financial Year of 2021/2022. Because of this, the Government of Uganda lacks fiscal funds to repay their own National Bank, the Bank of Uganda. It has taken money from one post to cover other posts, in advance, but it has no plan of returning these advances.

The addition trouble with this is that the International Monetary Fund (IMF) has stopped releasing funds or loans to the Government of Uganda until these advances are paid. That is again hurting the funding of the Government and the operational funds of the state. Since the IMF will not cover the deficits or the lack of funds in the GoU. The GoU is running so low that it’s not able to repay their own advances, which it created from the BoU.

This just shows how dire things are… this is only talk of 3,03 trillion shillings. The GoU budgeted itself with a 25,78 trillion shillings in domestic revenue in the budget of FY 2022/23, but we can wonder if the GoU has any of funds to recover or to spend on the advances in question.

If you wonder what mismanagement and how destructive a debt-cycle is… it is becoming very eminent that the NRM and the GoU has stretched it out. They are not able to get or find sources for fresh funds. The state is not able to get enough domestic revenue to even cover the basics. That’s why they are even shortfall on 3 trillion shillings to the Bank of Uganda.

This should be depressing and be worrying, but it is just another day in the Republic. The Value of Money is gone. The money and funds are just missing. Loans for development projects, day-to-day activities are just gone in thin air and they have no plans to repay them. If the NRM and GoU does this to its own Bank. What is it doing to the Multi-National Banks and Monetary Instruments it loans from on the regular?

That should put shiver down your spine. This is a sign of a financial downturn, a sort of financial self-destruction and possibly re-structuring of old debt. Because, the state cannot even carry the advances it took out in FY 2021/22. Peace.

Opinion: Parish Development Model (PDM) won’t eradicate poverty but it will become someone’s heist

The newly minted eradication of poverty model in the Republic. That was launched ahead of the polls in 2021. Now in 2022 it is obvious that scheme is bound to fail. It was inevitable… because none of the previous ones had any change or luck either. They have been doing this since the 1990s and nothing has worked.

So, now that the Republic is using 1 Trillion Shillings on it. You would think they had the magical point and the right tools to make it legit. While that is far from the truth. All the things that has been uttered and stated about is an epic failure. From the onset, there was no true organization, framework or even policies at its disposal. Even when the PDM is using similar means as in the past.

The recent weeks of arrests in Mitooma, Kabale and Kitgum over it only shows how badly it is going. In addition to the news of lacking disbursement in Masindi. This is just very compelling of the problematic approach to government spending or even institutionalize these sorts of government programs. When local government officers and employees are part of the gig and get caught slipping.

Certainly, the PDM was supposed to be another “magical bullet” to solve the issue of poverty. Until proven otherwise… I doubt it and there is no sign of improvement. Especially, considering the reports in combination with the reports that is already out. The statements of the Minister of Finance isn’t making the situation anything better either.

When you are spending like a drunk sailor and telling people to sober up. While inviting the sailor to a pub. You know what will go down and what the sailor will do. The sailor will get drunk and be on his merry way. That’s the same thing here… and it’s so in the open.

This PDM is bound to be a big-man’s heist. As there are no protocols, possible oversight or even systematic approach to safeguard the spending. The open corruption, mismanagement and impunity isn’t helping either.

Surely like in so many other instances there been giveaways, kickbacks and planned efforts to circumvent the rules to gain funds from the state coffers. This is happening as the state claims this is the way out. Nevertheless, it begs the question, why will it work now?

When we are so easily seeing the cracks. Reading the reports and the statements from high ranking officials. Heck, the few assessment reports on the PDM that have been released are grim. It is daunting that this won’t be it. Just another heist of the high and mighty. This won’t solve anything else than empty coffers and excuses for the ones in power. No, this will not help the ones in need or the ones it is intended to help. No, they are pawns for the kings and queens. They are the first to go out and loose anyway. This game is rigged and the PDM is no different.

Not like that is anything new either. “Missing Funds” is a proverb in the republic. The elites and the ones in the inner circle are eating. That is clear and the systems are made for them. This is why this latest scheme will be beholden to them too. They will find ways to disburse and ensure them a hefty pay-off.

So, expect someone to run with the bag and the State House looking idly by, because they have already a deal. This PDM is just the latest one to trick the public that they will initially do something. However, don’t be fooled. They will not do anything sincere, but only find a way of earning profits on the poverty that does exist. That’s been their trick and it continues to be so. Peace.

A Parliament Report states the government wasn’t prepared to launch the PDM

The now released March 2022 Parliamentary Report: “REPORT OF THE COMMITTEE ON PUBLIC SERVICE AND LOCAL GOVERNMENT ON THE STATUS OF THE IMPLEMENTATION Of THE PARISH DEVELOPMENT MODEL IN THE FY 2021/22” is stating a lot of facts, which is damning to the 1 Trillion Shilling Budget Post this Financial Year 2022/23. As the launch and the start of the Parish Development Model (PDM) is lacking basic government structures and even policies. This means the state is risking the whole 1 trillion shillings on a hope and a prayer. That’s the gist of it and it’s tragic.

The warnings has been there on the horizon. It isn’t like people haven’t seen it coming. This follows a long list of poverty eradication programs, which are mentioned in this report. While the state or government has never changed their approach. They have just re-invented the same of micro-finance scheme and rebranded it since the early inception of the National Resistance Movement (NRM).

That’s why it’s tragic that they have spent fortunes since the 1990s and still haven’t cracked the code. Certainly, the administration of it has been lacking, secondly the lack of policies and oversight. In addition, the NRM haven’t gotten proper results either. So, this report just shows where the failure is this time and the NRM launched a program and scheme without the proper due diligence. They haven’t even taken care of the basics and spending like a drunk sailor on this. This will end up on hookers and booze in the next safe-haven for the veteran seaman. Therefore, this will not end well…

Here is quotes from the Report:

Currently, there is no clear policy that sets the overall tone of the implementation of the PDM. Some of the closest policy frameworks on which the PDM is premised include; the Constitution of the Republic of Uganda (1995 as amended) under article 176, 2b, d and e) and the Local Government Act Section 95, 96 and 97. Unfortunately, these are not sufficient in setting the basis for developing the guidelines, development of a clear and realistic implementation roadmap for the PDM. The Decentralization policies presented by the Minister do not regulate certain pillars like financial inclusion, infrastructure and mindset change under the model. The Committee further observed that a clear policy framework for PDM will provide a vision, goals and principles to guide actions and implementation. The policy framework would clearly spell out the roles and responsibilities of each and every MDA, The governing framework on PDM, the oversight function, monitoring and evaluation and many others. Without the policy it will be very challenging to address some issues that may impede the PDM implementation and could lead to duplication of funding and services and further disoriented the public perceptions of the PDM” (Report, P: 9-10, 2022).

The Committee observed that, though there were previous government interventions to improve citizens’ socio economic conditions, the issues of building the entrepreneurial capacity of the population adequately has been locking. This is been identified as one of the reasons for the poor performance of some of the previous interventions. The committee further observed that many enterprises identified by some of the beneficiaries under the previous interventions were not within their knowledge and ability, leading to poor performance and in most cases collapsing of the enterprises. This is one of the causes of poor recovery of previous funds” (Report, P: 15, 2022).

Since 1987, Government hos implemented various interventions to reduce poverty in Uganda. These include; the rural farmer’s scheme (1987), Entandikwa scheme (1996), the Poverty Eradication Action Plan (PEAP) (1990), Kulembeka (To tap) (2001), Prosperity for All programme (Bonna Bagagawale) 2007, Operation Wealth Creation (201l), Emyooga 2020, Youth Livelihood Programme and Uganda Women Entrepreneurship Programme. The Committee observed that those interventions have not positively impacted on the long term poverty situation in the rural and urban communities. Poverty levels continue to be high at 39% despite the interventions. There is a need to appreciate the fact that poverty eradications a responsibility of the poor themselves and government programmes only supplement their cause” (Report, P: 17, 2022).

These quotes from the Parliamentary Report of March 2022 states certainties that can be detrimental for the whole scheme and the PDM itself. The NRM should know better and be professionals, but instead they have just started a fresh without the tools, which is needed. That is what the Report says and it’s damning.

The NRM and the Government of Uganda should have more structure before spending like crazy. However, here it is clear that the various parts of the PDM wasn’t prepared. Neither the main ethos, policies or the procedures wasn’t prepared. The state only had prepared budget-posts and planned spending. However, they haven’t built the structures or the mechanisms to make it work. That’s really foolish, but on code or modus operandi for the NRM.

So if this falls or fails miserably… well… everyone could see it coming. There was no reason for it to work. The only reason why it could work is the people it is actually reaching and making a difference. However, that’s just a fools luck and not based on prior work before the launch. It is like a brother going to bar and gets lucky. Not because he knew a lady was ready there or his charm would be enough. He just went anyway and got lucky. There was nothing saying he would get lucky, but he did… because he was at the right place and at the right time. That’s what the NRM is trying to do here and they are throwing one trillion shillings at it. Peace.

Opinion: Honourable Minister Kasaija is just proving that the PDM wasn’t prepared for launch…

As suspected before the launch of the Parish Development Model (PDM). The state didn’t do their due diligence or the framework to prepared for the launch of it. This is just a continuation of half-assing it and hoping it works. Because, the National Resistance Movement (NRM) is known for micro-finance schemes and done so since the 1990s without any real progress or luck for that matter.

The PDM is just the newest creation or scheme in a long of line of them. They are coming and becomes known entities around elections or campaigns for General Elections. After that the real trouble begins and the realities of the mismanagement, nepotism and hackwork is evident. Which is very clear by the Minister of Finance, Planning and Economic Development (MoFPED) Matia Kasaija display in his statement about the current affairs surrounding the PDM.

There is no proof or evidence, which shows me this will be successful. The PDM was bound to fail, but he just spells it out. The lack of organization, planning and practical operation of the scheme is just staggering. This seems like a waste of a trillion shillings and is bound to be “heist”. It will not become beneficial or create any noteworthy development. No, this is made for a ghosts and lucky beneficiaries locally. That’s really it…

Just read these statements… it’s depressing… to say the least.

My Ministry therefore urges all Local Government Accounting Officers to fast-track the prior activities necessary to ready the PDM SACCOs for disbursement specifically: – to complete data collection on all households; and finalize the establishment of PDM SACCOs in all the Parishes under their respective areas of jurisdiction” (…) “Rt. Hon. Speaker and. Hon. Members, n July 2022, my Ministry requested the Local Government Accounting Officers to work with Operation Wealth Creation to validate the PDM SACCOs formed and verify the membership in the PDM Enterprise Groups and SACCOS, prior to the disbursement of funds” (Matia Kasaija, 23.08.2022).

Rt. Hon. Speaker and Hon. Members, for effective management of PRF funds by PDM SACCOs and learning from past experiences, the target beneficiaries should not access the disbursed PRF funds before they are prepared. Initial access to funds shal1 be preceded by training and preparation of PDM Enterprise Groups and PDM SACCOs on Governance, Loan Management, Records Keeping, Good Agricultural and Agribusiness Practices. Furthermore, the Parish Development

Management Information System (PDMIS) has been designed with the capability to track daily transactions in the PDM SACCOs” (Matia Kasaija, 23.08.2022).

Here after all this time. The PDM was launched in February this year. We are now half year later and the organization in the districts or parishes are far from ready. While the budget and revolving fund has cash-flow. The MoFPED is prepared financially, but the structures are non-existing, if ever ready it seems.

The PDM SACCOs needs to be in a designated gazetted parish. They need to have an account at a supervised financial institution. The PDM SACCO needs to be registered and be certified as well. The PDM SACCOs has to sign the agreement with the RPF agreement with the CAO or Town Clerk. The Local Government Accounting Officer has to submit a form to confirm that the PDM SACCO is under guidance of pillar three or financial inclusion. The last part of the PDM SACCO has to verified by the CAO/Town Clerk, supported by the Operation Wealth Creation and proven by data in the Parish Development Management Information System (PDMIS).

Yes, there are sort of system, but they are very hectic. The PDM SACCOs who are new creations in the over 10,000 parishes in the Republic. They have to go out there and get registered. These has to comply with all the various entities, both locally and financial instruments (account in a bank etc). While they are awaiting the disbursement of funds and get operational. That’s really hectic.

The PDM SACCOs has to be able to get a hold of the CAO/Town Clerk and get the paperwork done. To even be eligible. This is creating a huge secretariat and a registration process, which will take time. Both in the banks and in the local government. Local government that is understaffed and has enough work on their plates as is.

I cannot see this going well. It was very interesting revelation that this has to go through the Operation Wealth Creation (OWC), which has already been a failure and haven’t lived up to the hype. Wondering if they will create another hurdle passing by Emyooga later on too. Because, this is a hectic mess and the state wasn’t prepared. Neither can the villages or the local government be. Since, this will cause a lot headache and needs of papers to even get started.

That’s before the Value for Money Reports or even consideration of if it is even worth it or has any sort of justification to be disbursed as it is. Since, this seems like scheme, which is bound to fail. Today statement isn’t inspiring or showing any hope of otherwise either. This is maybe to be “big” to fail, but I have a feeling… this will end in tears. Peace.

Opinion: Honourable Minister, 10.6 Billion shillings isn’t wired by an error…

Finance Minister Matia Kasaijja has admitted to irregularly paying out 10.6 billion shillings through a supplementary budget to six people as compensation for land that was taken over by the central government. However, the Minister told Members of Parliament that the then Lands Minister who is now the Inspector General of Government Beti Kamya did not have the powers to initiate the supplementary budget on behalf of the Uganda Land Commission” (NTV Uganda, 31.05.2022).

Finance Minister Matia Kasaija has admitted that the UGX 10.5 billion that was released to compensate land claimants was done in error” (NBS Television, 31.05.2022).

This is how not to run a government and wasting public funds. The Ministry of Finance, Planning and Economic Development (MoFPED) are in-charge of the budgets and financing of the state. That’s why there should the grown-ups and technocrats who ensure the safety of every single transaction, also that the designation of votes on spending is correct and finally properly financed by domestic revenue. However, asking for that… is too much to ask.

This is not a direct error or a mistake, but a calculated risk to pay-off either someone or somebody. Because, nobody gets billions of shillings on their account by a mistake. Unless, the Minister and the MoFPED are so inept and so scrupulous that it has done this. Now his just claiming an error…

That is troublesome affair. Elsewhere, this would make an inquiry, committee report and the Minister would be suspended. Since he cannot function, act within protocols or the due diligence before processing the transactions in question. Because, there should be safety-nets, vouching for the payments or transactions before they are going out. So, that more than one person is checking if the accounts, the people receiving is correct and within the means of Ministry or Government institution in question. However, that is clearly too much to ask.

Minister Kasaija has failed in his duties, the same has the Permanent Secretaries and anyone allowing the transactions to go. The receivers are not at fault. That is the MoFPED and the ones who allowed it. There was people signing it up on it and allowing it. Therefore, the losses and the expenditure happened.

This is 10 billion shillings spent wrongly and dubious transactions, which should be a warning sign of how not to operate. However, this is just the ice-berg of what is happening. Since, if they can do this with 10 billion shillings and they are in-charge of trillions upon trillions of shillings. That’s why people should be worried what else is happening behind closed doors.

The Minister shouldn’t just call it an error, but it is a systemic default. It is a system and protocols which isn’t mattering at this point. If due diligence or procedures was followed. This shouldn’t have occurred in the first place. However, they didn’t care and could get away with it….

That’s why this is just a reflection of how the MoFPED and the NRM values money. There is no value of money, but only reckless spending without no thought about tomorrow. Peace.

The Art of Deficit Financing: Budget 2022/23 and the worrying affects of the growing debt…

The proposed budget for FY2O22/23 hos increased to UGX 47.25 trillion from the approved budget of UGX 44.77 trillion in FY2O21/22. ln the proposed budget, recurrent expenditures amount to UGX 33.54 trillion (71%) while development expenditures amount to UGX 13.70 trillion (129%). Worryingly, the projected revenue collections of UGX 25.54 trillion cannot fund the country’s entire recurrent expenditures” (Opposition Response to the Annual Budget Estimates for FY 2022/23, 03.05.2022).

When you read the first numbers on the Budget for the Financial Year of 2022/23 you see a problem that has been a long lingering issue. The National Resistance Movement (NRM) and Government of Uganda (GoU) has done this for several of years now. The state has banked on loans and grants to cover the deficits. While the state is budgeting with a deficit financing method, which is far from covering fiscal funds by the lack of domestic revenue. That’s why the rising debt and the cycle of recycling debt isn’t making things better.

Just read this paragraph here:

It is critical to note that debt management costs hove risen from UGX 8.58 trillion in FY2017/18 and ore projected to be UGX 15.94 trillion in FY2022/23. This translates to on increment of 86%. The costs take first coll on the budget to cater for interest payments, commitment charges, debt management fees and amortisation. Therefore, from the onset 33% of the proposed budget will

not be available for service delivery. instead, it will be utilised for payment of partial debt commitments” (Opposition Response to the Annual Budget Estimates for FY 2022/23, 03.05.2022).

Just seeing this number, as you see the lack of domestic revenue to cover the budget of 47 trillion shillings, which is only at the level of 25 trillions. While the project debt management is put to about 16 trillions shillings. That means most of the domestic revenue would be used to pay old debt. Unless, the state plans to take out more loans and recycle debt to pay the old debt. That is just pushing the problem further down the line and get more interests as well. Therefore, the state finances isn’t tricky anymore, but a tragic phenomenon. These sorts of numbers are getting closer to default and a possible debt trap at one point. As the state needs more loans to cover current loans. That is not how to run a nation and neither how to run a fiscal responsible government.

The numbers becomes even more striking:
“The advance effect of this astronomical level of borrowing is felt through interest payments of over UGX 5.5 trillion in FY2O22/23 rising from UGX 2.4 trillion in FY2017/18. An increment of 130%. This is coupled by external debt repayments that ore projected at UGX 2.4 trillion in FY2022/23 rising from UGX 589 billion in FY2017/18. An increment of 307%. These toke first coll on the revenue collection and reduces funds available for service delivery” (Opposition Response to the Annual Budget Estimates for FY 2022/23, 03.05.2022).

We see the debt management and now we see the rising interest payments are also doing the same. The ones that has been crying wolf and worried for the rising debt portfolio is catching up with the government. The Ministry of Finance and Planning and Economic Development (MoFPED) has failed to comply with the mechanisms and the codes of Public Finance and Management Act. Clearly, the Government and the all the Ministries has to be following suit.

These sorts of numbers should strike fear of a debt default and a crashing economy. The art of deficit financing … is now becoming a growing issue. The state cannot hide from this and this should worry the citizens. As there is nothing given that the creditors will be merciful or give way. They might … be vengeful and take collateral over failure to repay the debt. Peace.

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