This is just funny and one should really give it a try. What would happen, if donors would withdraw their financial support for six months?
Please read these illustrative articles in today's papers:
The Monitor May 2 , 2005
We can do without donor aid - Museveni By Frank Nyakairu KAMPALA — President Yoweri Museveni has said Uganda can do without donor aid if the Uganda Revenue Authority (URA) plugs the leakages and controls tax evasion. In his speech to commemorate the International Labour Day, Museveni said yesterday he has been convinced by the top management of URA that the country can do without donor aid. JOB DONE: Bukenya (L), Premier Apolo Nsibambi (C) and Labour Minister Bakoko Bakoru leave Kololo airstrip yesterday (PPU photo). The managers, he said, told him that URA's tax collection for March this year had overshot the target by Shs40 billion. "I recently met the entire new management of URA, they think that by stopping leakages in tax collection we can move to 18 percent GDP growth," Museveni said in a speech read for him by Vice President Prof. Gilbert Bukenya. The President is on a tour of western Uganda.
"This would translate into approximately Shs270 billion if the economy continues to grow at 5 or 6 percent. If we get a GDP (Gross Domestic Product) collection ratio of 24 percent, we shall not need this ignominious practice of dealing with these so-called donors," Museveni said. "Those [donors'] meddling is responsible for the perpetuation of terrorism in northern Uganda, load shedding and the removal of tax holidays for our investors." Museveni's comments come days after the British government announced last week that it had withheld Shs17 of aid billion citing concerns about the handling of several aspects of the country's political transition. Donors have queried defence spending and in the past the World Bank pulled out of funding the power project at Bujagali. Both moves have infuriated the President. A statement from the British High Commission last week said Britain was also particularly unhappy with the progress made towards establishing a level playing field for parties in the country.
The government on Friday shot back. The Minister of Information, Dr James Nsaba Buturo told The Monitor that if Britain is to give aid to Uganda, it should be without strings attached. The donors have increasingly criticised several aspects of the transition including the proposed constitutional amendments especially about lifting of presidential term limits to allow a third term for President Museveni. At yesterday’s celebrations KCC’s controversial sale of land belonging to the NSSF took centre stage. "That land should come back to the workers. KCC's decision to sell it should be rescinded," Labour minister Bakoko Bakoru said. The chairman of the National Organisation of Trade Unions, Mr David Nkojjo called on employers to stop using job experiences as conditions for employment."
From The New Vision
Donors can’t dictate to us, HELLO: Bukenya greets Nsibambi at Kololo yesterday By Fortunate Ahimbisibwe
PRESIDENT Museveni yesterday blasted donors, saying they could not continue to direct how the country should be managed.
“The so-called donors cannot continue to show us how we should manage the country,” he said.
In a speech read by Vice-President Prof. Gilbert Bukenya at the Labour Day celebrations, Museveni said the donors’ continued interference had partially perpetuated terrorism in the north.
Museveni said Uganda would cease to need the donors if the Uganda Revenue Authority (URA) became able to stop tax leakages and evasions.
He said he would oversee URA operations himself, to ensure efficiency.
“Recently, I met the management of URA and their thinking is that if we can stop leakages in tax collection, we shall move to 18% of GDP. This would translate to approximately sh270b if the economy continues to grow at five to six percent,” he said.
He added, “If we achieve a GDP ratio of 24%, we shall not need the practice of dealing with donors, whose meddling is partly responsible for perpetration of terrorism in the north, load-shedding and removal of tax holidays for investors that affected our development tempo.”
The British government on Friday said it had withheld five million pounds (about sh6.5b) in aid due to Uganda’s failure to progress towards establishing a fair basis for multipartyism.
The British High Commission said the money was part of 40 million pounds for the financial year 2004/5. Donors contribute 52% of the national budget.
Museveni said trade-related facilitation was a better way of working with donors.
The Labour Day celebrations were held at Kololo airstrip in Kampala. The theme of the poorly-attended function was “Youth Employment: An engine to National Development.”
Premier Prof. Apolo Nsibambi, labour minister Bakoku Bakoru, energy minister Syda Bbumba, and state ministers Dr. Alex Kamugisha (health), Henry Obbo (labour), Maria Mutagamba (water), Naiga Ssekabira (disability) and less than 10 MPs attended. About half the chairs in the VIP section were unoccupied and ordinary people were asked to take them.
A URA report recently revealed that the total revenue collection in March was sh1.36b against a target of sh1.32b.
Bakoku said she had presented the national employment policy to Cabinet for consideration.
“We shall have a national employment policy by next year. this year our focus is on youth employment,” she said. Published on: Monday, 2nd May, 2005
A donor walkout would hit urban areas hardest WITHHELD FUNDS: Blair’s UK By Paul Busharizi
ANALYSIS
UGANDA'S urban class will suffer the brunt of a return to 1980s-like commodity scarcities and joblessness if the specter of a donor walkout materialises, analysts say.
Last week, Britain announced it was withholding five million pounds (sh17b) after Uganda fell short on pre-agreed targets that would smoothen the transition to multi-party democracy.
The funds were part of a 40 million pound-package agreed for the 2004/2005 financial year.
Another 50 million pounds agreed with the Government comes up for review in September.
However, if Uganda meets the targets, it would be eligible to benefit from the withheld funds.
Britain is one of the biggest donors among nations that contributed almost $850m to Government coffers in 2003/2004, about 48% of Uganda’s budget.
“If there was a donor pull-out tomorrow, the shilling would just collapse,” dfcu senior forex dealer David Bagambe, said.
“We import more than we export so the difference required to sustain our imports comes from donor funds. A withdrawal of these funds would see the shilling depreciate dramatically,” he said.
In 2003/04, Uganda’s imports valued at $1.874b were double the export receipts of $927m.
In addition, there is an annual estimated $500m coming in from Ugandans living abroad.
An increase in the dollar rate would lead to high inflation rates since more expensive imports, especially fuel, would trigger price increases in every sector of the economy.
Last week, fuel companies announced the second increment in a month on fuel prices, citing rising world oil prices and a depreciating shilling.
“As a result, you can expect job losses,” a senior economist said.
“Our factories use a lot of imported inputs. If their product prices increase, demand will fall and they will have to cut jobs or close.
“Never mind that most of our traders deal in imported merchandise and they will go out of business too,” he said.
In the short term, a combination of across the board job losses and galloping inflation would hit urban populations hardest.
“The most immediate losers will be people in the civil service who have access to these funds and then the rest of the urban population,” said Walugembe Musoke, the head of the economic unit in the Vice-President’s Office.
“But in the long term, the rural people will suffer as the urban areas expropriate even the little the rural people are earning,” he said.
To try and plug the hole in the budget that would follow a donor pull-out, the Government would have to drastically cut its expenditure as well as find ways to mobilise resources locally.
Budget cuts can be expected in public administration, which consumes more funds than defence, agriculture or health.
Tax revenues may suffer as a result of a depressed economic environment.
“The mechanism is there to mobilise resources. The bond market is up and running,” said Stephen Kaboyo, Bank of Uganda deputy director for domestic financial markets.
“Kenya suffered a donor pull-out more than 10 years ago, but they survived by activating their bond market,” he said.
Last year, the Bank of Uganda launched a bond programme whose main function is to control inflation by mopping up excess liquidity, but which can be used to fund Government expenditure.
However, borrowing from the public would raise Government expenditure and not help the inflation situation. Published on: Monday, 2nd May, 2005
