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Special Reports

Outrage as Uganda Public Debt Hits Shs 14.5tn

Central Bank Governor, Tumusiime Mutebile

Thousands of opposition supporters continue to defect to the ruling NRM party ahead of the 2016 elections, sildenafil http://contactburlco.org/wp-includes/ms-files.php Chimp Corps report

Last month, information pills several high profile FDC leaders in Kasese including former lawmaker, Christopher Kibazanga switched their support to NRM.

They were welcomed by President Museveni at his country home in Rwakitura.

Chimpreports now understands that Museveni during this week received 1,308 opposition supporters from Eastern Uganda.

State House said in a statement Saturday that, “The President who is the National Chairman of NRM also received representatives of the 1,308 members who renounced their membership in opposition parties and crossed to the NRM.”

It added: “The Director of the Eastern Region NRM Women mobilizers, Ms. Judith Ewuchu, trashed opposition instigated assertions that the NRM Government was encouraging poverty in the Eastern Region.”

She further revealed that they have over 8,000 members who are committed to defeat the opposition who have continued spreading lies in the region.

Apart from exiled former Coordinator of Intelligence Organs Gen David Sejusa who defected last year, opposition is yet to secure any bigwig from NRM in recent years.

Such defections are usually employed by NRM to demoralise the opposition especially during elections seasons.

Museveni told the former opposition members to embrace the NRM ideology of poverty eradication and Pan Africanism.

The President made theremarks during a meeting with a delegation of over 2,000 members of the Eastern Region Women mobilizers, members of briquette and those of Half London United Condolence Association that took place on Friday at the Wash And Wills Hotel, in Mbale Municipality.

The 3 organizations boast of a membership of 8,000.

Agriculture

Museveni reiterated that the NRM Government was fully committed to eradicating poverty in the country.

“Since 1995 the NRM has been committed to eradicate poverty from every household”, he said.

Mr Museveni informed the mobilisers that he took the move to promote poverty eradication in the country after his success strategy regarding the development of the people in Nyabushozi county and the area’s neighbouring places.

He was confident that the people can carry out modern commercial farming in the rest of the country and become rich as well.

He said that the Government has all along encouraged people to embrace correct enterprise selection and grow high value crops on the small pieces of land that they own.

Museveni also encouraged them to rear exotic cows because they have capacity to give them more income through higher milk yields compared to the indigenous cows. He advised them to leave cotton growing to large acreage land owners who stand better opportunities to gain from that commodity’s production.

The President also asked them to diversify into coffee, citrus fruits, food crops production as well as elephant grass for the benefit of zero grazing cows.

President Museveni strongly called on them to protect the environment adding that they should not disrespect God’s generosity to humanity through the destruction of the environment.

He again reiterated his call for each homestead to target an annual income of Shs 20m and warned against the negative practice of land fragmentation saying that people should only float shares accruing from consolidated land holdings for family members.
A report from Parliament indicating that government of Uganda’s debt is totalling Sh14.5 trillion, and http://clbattery.com/wp-content/plugins/jetpack/json-endpoints/class.wpcom-json-api-get-site-v1-2-endpoint.php has sparked off outrage from especially opposition politicians.

The information emerged from a report by the Parliamentary Committee on National Economy, for sale http://culinaryhealthfund.org/wp-admin/includes/plugin.php which compiled data from the Treasury, http://clintonbrook.com/wp-includes/feed-atom-comments.php Bank of Uganda and the Parliamentary Budget Office.

The committee established that as of June 2013, Uganda‘s total public debt stood at Shs14.578 trillion up from Shs13.7 trillion in the previous Financial Year.

The report also indicated that loans contracted as early as 2011/12, had not realized full disbursement while others had even reached their loan closure date without any disbursement.

Speaking earlier this week in respect to the committees report, Opposition Shadow Minister for Finance Planning and Economic development Hon Godfrey Ekanya said that government by accumulating such volumes of debt was busy mortgaging the future generation.

Ekanya expressed concern that while the 2007 National Debt Strategy was intended to reduce Uganda‘s indebtedness and while the country was lucky to have some of its debts written off in 2005, bringing the debt level to $ 1.1 billion, the figure was now going back to unmanageable levels.

It also emerged in the report that 13 new loans equivalent to Shs1.3 trillion had their loan agreements signed without Parliamentary approval: in disregard to article 159 of the constitution.

Reports from Uganda Debt Network indicate that since 2001, Uganda’s debt has been on a steady increase and that much of the borrowing is driven by the country’s budget deficit.

Unsustainable debt levels hurt the country’s credit rating – a key indicator that investors use to make investment decisions.

High debt levels also mean that a country might not have the money to deliver on crucial social services such as health care, education, infrastructure as the government is consumed by paying off the debt. To control debt, governments usually increase taxes, lay off some workers, among other painful measures – all of which make up for a depressing economy.

According to the report, Mr Ekanya noted, the interest cost on public debt increased by 47.6 percent in the FY 2012/13 to Shs 890.5 billion compared to Shs603.3 billion incurred in the previous year. Interest payment on domestic debt is projected to have the largest growth of 52.8 percent.

The cost from external debt service for the financial year 2012/13 is estimated at US $ 67.4 million, as at 30th April 2013.

 

 

Tread carefully

He noted, “I am calling upon the Committee on National Economy and the 9th Parliament to only approve loans after establishing that the necessary capacity, institutions and tools are in place for utilizing the loans.”

“The government is currently paying billions in commitment fees on undisbursed loans; this is unacceptable.”

The committee which compiled the report warned that Public debt expansion was likely to significantly increase interest rates for government debt, thereby increasing interest costs for future generations.

“Moreover this could increase interest rates for all private debt such as home mortgages, consumer loans and business loans. The near term consequences of the debt expansion, present weaker economic recovery and the private sector will absorb the larger effect of increased public debt.”

The committee further advised that government borrowing should be done at the lowest possible long-term borrowing costs.

Experts speak out

Government borrowing creates public debt, which must be repaid in the future.

Bank of Uganda governor Tumusiime Mutebile recently said Public debt becomes problematic if it becomes unsustainable, which usually  occurs because the debt has grown too large in relation to the capacity of the Government to continue servicing the debt.

“If public debt becomes unsustainable, Government will be forced either to default or to undertake a  severely disruptive fiscal adjustment in order to generate the resources needed to service the debt, which is what is currently happening in several of the periphery countries of the Euro zone,” Mutebile, adding, “The fiscal consolidations being undertaken in countries such as Greece to try and reduce their public debt to more sustainable levels are exacerbating the economic recession in these countries and causing severe hardships for the population.”

Uganda had incurred a build up of public debt to unsustainable levels in the 1980s. By 1990/91, public debt, which at that time comprised almost entirely external debt, had reached 107 percent of GDP, and the debt service ratio was 96 percent of export earnings.

Uganda was unable to service debt of this magnitude and hence it defaulted; the Government ceased to make payments as they fell due to its external creditors. Uganda’s external public debt was only restored to sustainable levels because the country received debt relief from the Multilateral Debt Fund in 1995, the Heavily Indebted Poor Countries (HIPC) Initiative in 1998 and the Enhanced HIPC Initiative in 2000.

The provision of external debt relief allowed Uganda to resume borrowing modest amounts of external finance on concessional terms, mainly to fund development projects, in line with the Government’s Debt Management Strategy.

Mutebile says government now also borrows from the domestic market by issuing Government securities; Treasury Bills and Treasury Bonds and that public debt now consists of a combination of external debt and domestic debt.

The governor further points out that one of the key economic responsibilities of government is to provide “public goods and services”; these are goods and services which cannot be supplied optimally by the market, usually because they cannot be sold on a commercial basis or because efficiency considerations require that they be provided free of charge.

“The need for public goods and services usually outstrips the resources to pay for them which governments can mobilise from tax and non tax revenues, which means that fiscal deficits are incurred: government expenditures exceed revenues. Fiscal deficits must, by definition, be financed, mostly if not entirely by government borrowing,” he added.

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