L-R: Regina Navuga, Jane Nalunga and Ausi Kibowa addressing journalists.
A section of activists have called on Government to use the Shs1.72Trn acquired from the International Monetary Fund (IMF) to purchase Covid-19 vaccines so as to further open up the economy.
The activists including Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) Uganda, OXFAM Uganda, Uganda Debt Network and Civil Society Budget Advocacy Group (CSBAG) made the call during a press briefing in Bukoto, a Kampala suburb on Sunday.
Jane Nalunga, Executive Director SEATINI said that in August 2021, the IMF issued new Special Drawing Rights (SDRs) to a tune of $650 billion to help address member countries’ liquidity challenges and enable them finance the fight against the COVID 19 pandemic and support national recovery efforts.
Of these funds, Uganda as an IMF member country received about $490 million (Shs1.72 trillion), funds Government can now use to meet her public spending needs without having to acquire new loans.
Now, the activists want Bank of Uganda to exchange these resources into freely usable currencies like the dollar and channel them to finance ministry for budget support rather than keep them on its central Bank balance sheet.
“Priority on utilisation of these new funds should be placed on procuring vaccines and critical medical and protective equipment; injecting more money to the real economy; supporting micro small and business enterprises; providing adequate social welfare support through programs such as direct cash transfers,” Nalunga said.
While defending the decision to proposal to have the newly printed money used to procure Covid jabs, Nalunga said Government might be tempted to use the money to pay off it’s public debt, yet priority should be given to fully opening up the economy that has been battered by the pandemic.
She pointed out that the Pandemic has pushed 3.1million Ugandans into poverty, bringing the number of Ugandans who are currently considered poor to 11million as per World Bank.
The Activists argue that if focus isn’t put on vaccination, Uganda is likely to slip into debt crisis after the Ministry of Finance this week revealed that thale Pandemic had affected domestic revenue mobilisation with Uganda Revenue Authority failing to collect taxes to a tune of Shs2.4Trn.
This has prompted Government to resort to borrowing with the public debt hitting Shs70.3Trn as at June 2021 compared to Shs65.8Trn as at June 2020, meaning that in a space of a year, Government borrowed to a tune of Shs4.5Trn.
Nalunga also questioned why Government has remained silent about having the new printed money from IMF in it’s possession, warning that such silence could breed avenues for misuse of the funds, because even the Public Finance Management Act 2015, has no mention on how such free money should be used.
“We believe that these funds are now in the custody of Bank of Uganda. It is however our observation that the debate on the proper and transparent use of these resources and consequent accountability have left solely to the discretion of the Central Bank and a few technocrats from Ministry of Finance with limited involvement and dialogue like media and Parliament,” said Nalunga.
Ausi Kibowa, Program Associate-Debt and Aid criticised the Ministry of Finance for failing to take advantage of the debt relief offer provided by a section of her creditors under the Great 20 nations commonly known as G20, arguing that if Government applied for such relief, Uganda would be saving over Shs1Trn in debt repayment.
He said, “The government has remained reluctant in seeking this offer despite neighboring counterparts like Kenya and Tanzania having already benefitted from the initiative. As a consequence, Uganda will continue to spend over Shs4.7Trn in interest payments lenders within the current financial year placing the new SDRs at risk of being used for debt repayments than rather supporting recovery efforts.”
The activists also blasted IMF for the inequality in sharing of this money, revealing that of the USD650Bn, United States alone got USD79Bn an amount that is equivalent to what 24 nations received.
“IMF printed new money. It favours the bigger economies. How do you expect to reduce global inequality. There should be a systematic reform on how IMF is governed,” said Kibowa.
Civil Society also cautioned Bank of Uganda against considering the option of printing new money as was done recently when the Central Bank printed new money to plug the hole that was missing in the budget, saying the move comes with huge consequences as it reduces purchasing power of the currency, thereby deleting value of our currency.
According to Government, Shs450Bn is needed to purchase Covid jabs for 40% of Uganda’s population.
