Museveni’s reasons for borrowing 600 million euros don’t add-up
By Charles Kamya Ssentamu
Determined to feed his insatiable appetite for money amidst dwindling resources, President Museveni has hatched a big hit on the Ugandan taxpayer again, this time using the cover of a budget deficit.
Museveni wants to borrow 600 million Euros in budget support but he is not quite open about what that money is going to do. On Wednesday, his junior finance minister David Bahati, his hapless hatchet man sought parliamentary approval for a Euro 600 million loan, supposedly to plug a 9 percent shortfall in revenue.
The money, to be borrowed from local lender Stanbic and the Trade Development Bank in equal amounts, will be disbursed in a local component to be provided by Stanbic while the TDB provides the foreign currency component. While Bahati cited “revenue shortfall and budget expenditure pressures,” the amount he was seeking to borrow far outstrips the declared revenue shortfall for the first quarter of the financial year, which is just 6.6 percent of projected revenue.
In effect Museveni wants to borrow money on a shortfall that may or may not materialize. Bahati said that government envisages a Ushs 2.47 trillion shortfall of projected 20.44 trillion from local revenue.
A retired tax expert however disputes this claim, reasoning that shortfalls during the first quarter of the financial year are not unusual because Uganda’s local revenue, which depends largely on taxing international trade, tend to peak in the second and third quarters.
“Even last financial year there was such a shortfall but the full year closed with surplus of Shs254 billion. Let them find another reason to explain the need for that money otherwise, this points to something fishy,” he said.
There is normally a spike in imports associated with the Christmas and Easter holidays, which boosts tax revenues. Repatriation of dividends also tends to result in depreciation of the shilling giving URA a boost through exchange rate gains. The tax expert’s suspicions are partially supported by Bahati’s own utterances.
In his explanation to parliament, he said government was projecting a Ushs 1.87 trillion shortfall in revenue, yet there was an additional expenditure requirements of Shs1.43 trillion for “classified expenditure”. Classified expenditure is often a code word for the opaque security sector whose activities even parliament is not privy to.
Ugandan security services however are led by people known to be voracious embezzlers and the huge budgets they consume – for very negligible returns in terms of public safety! – have over the years become a deep source of disaffection for the regime.
Figures released by the treasury last month indicated a revenue shortfall of only 6.6 percent for the first quarter of the financial year. Why is Museveni then demanding such huge sums – something that no longer surprises weary Ugandans though?
Shs 5.6 trillion was collected against a target of Shs 6 trillion. Yet that shortfall did not have any impact of budget releases, which were nearly 6 percent ahead of the half-year point.
Keith Muhakanizi, the secretary to the treasury said 55.9 percent, or Shs 11.2 trillion of the Shs 20.8 trillion planned for the entire year had been released. Muhakanizi attributed the shortfall in first quarter collections to postponement of digital tax stamps to January 2020, “which resulted in 0.7 percent shortfall from that tax head”.
Again the question rises: why does Museveni want the additional money?
The answer is to be found in his endless extravagances as he splashes money to counter a perceived threat to his power, by musician turned legislator Robert Kyagulanyi who has massive support amongst the youth. Uganda’s youth will constitute a voting block of 53 percent of voters in the 2021 elections.
Besides brutalizing them, Museveni has also been dangling the carrot by releasing billions in unbudgeted expenditure in a bid to lure them to his side. He has hired musicians and other agents from “the ghettoes” whom he keeps giving huge sums of money in an attempt to lure them from the opposition.
These reckless expenditures have raised the specter of inflation. Museveni is once again adding to the damage the economy in his personal power plays!
This is happening all over the country and it is not unusual to see MP’s moving with piles of cash to lure increasingly disaffected voters.
“Museveni is like the hare that chose to eat the peanuts that had been reserved for seed stock. And as usual, Ugandans will bear the brunt of his excesses since the money being borrowed will not only have to be paid back by future generations, but it will also take resources away from service delivery for the present,” said an economist at a local think tanks.