{UAH} ATALINA "FISCAL TOOL", "DEBT-TO-GDP RATIO"...

HOW DOES LINGUISTIC POSTURING HELP ON ANYTHING?

I actually didn't want to enter into this debate but since I have already drafted this assessment, well here it is.
First of all, I am one of those who wants leaders, the local media, and our economics professionals to make things simple for the ordinary Ugandan. Especially when explaining policy matters that affect them. The language doesn't have to be confusing or "un-understandable" to the common man, and there is nothing happening in economics that the ordinary citizen doesn't know about in an ordinary way.
As an economist by education, I am privy to the intellectual posturing that economists engage in to either impress listeners or confuse them, or both. The term "Fiscal tools" is yet another empty bullet in their linguistics arsenal. I can guarantee you that 99% of the people mocking Hon Robert Kyagulanyi (aka Bobi Wine) do not know exactly what it means themselves. When asked, the majority are reportedly fumbling in economics linguistic gymnastics to either try to explain what they think it sounds like, while others will simply feign a more important issue to attend to and run.
Truth is, most of these terms mean simple things like reducing or hiking taxes on goods and/or services for a political or economic policy reason (that's what "Fiscal tool" actually means), while other terms are outright bullshit (Debt-to-GDP ratio for example).
So Hon. Kyagulanyi says that if elected president he will remove OTT tax.
Removing that tax is a fiscal tool.
A tool for what? A tool for increasing and spreading the use of internet technology amongst all Ugandans in this global digital era, and in my professional assessment that is a necessary policy endeavour in a country where mobile internet use is expensive for the average citizen and therefore it's development restrained by the tax. The latest news reports a few weeks ago indicated that over four million Ugandans have opted off the internet since the tax was enacted last year. Therefore what the young honorable is proposing is a simple but highly progressive policy that has a high potential for positive economic impact because the internet is a great product for both global information and global communication. Whoever laughs at that is laughing at their own ignorance in their own mirror at home, and exposing their own ignorance in that same mirrors well. Interestingly, it seems to be those who want to be perceived as learnt elites who are in that mirror most.
I however urge the young legislator first to go slow, and possibly to stay close to those knowledgeable about governance and public administration so as to acquire more technical substance, more competence on policy matters, and generally more knowledge about the runnings of an actual government. From the work of an LC I administration right upto to the RDC's, the Ministries, and the office of the President.
Being in parliament is obviously one of the best places one can get a free crash course on most important aspects of public administration and public policy.
Now let me show you how those considered  the most intellectual experts on economic matters are themselves ignorant and mostly useless. These include the likes of Andrew Mwenda and mostly Bank of Uganda governor whose institution does actually very little work for the economy the whole day, gets paid quantum amounts as a salary, collapses and fleeces the banking sector as heard recently in parliament, and they then come out weekly to confuse the masses with great fiscal economics predictions and related expert vocabulary that few of us know is actually just impressive but empty talk.
As Ugandans across the country and their civil society organizations are complaining about the disturbing levels of the national debt burden, there is one really quack economic theory being repeatedly shoved down Ugandans' throats by the Ministry of Finance and the so-called "regime intellectuals": It's the famous Debt-to-GDP ratio.
Let me state here that I challenge anyone to a public debate on this topic.
First of all, given the history of secret tally centers and cooked election results, one would be right to doubt the credibility of any NRM socio-economic data. Their last statement by Ministry of Finance last December about the state of the Ugandan economy was the noise "woooooweee".
However the New Vision newspaper stated Ministry of Finance data claiming that the national debt is at $10bn US dollars. Meanwhile, just about two weeks ago (on 23rd February) the independent NGO Uganda Debt Network held a poorly covered press conference where they made the astounding declaration that according to their tracking and their latest revised calculations, the national debt actually stands at $15.2bn dollars. The situation is 50% worse than what the ministry is telling Ugandans.
It's like you are told you have a small ulcer in your stomach, and suddenly another specialist comes and discovers that all your internal organs are rotting.
Obviously they both left out the additional $10bn dollars that Museveni has been found by the International Court of Justice to owe Congo DRC for invading and plundering their country. The matter is reportedly under judicial appeal
So in reality the national debt is at a megalithic $25bn US Dollars at this moment. Already far beyond the 50% safe-zone in their own Debt-to-GDP ratio theory.
The worst problem in my view is continuing to use this lame excuse theory to continue endebting the country even when its own alarm bells are already ringing.
For a poor African nation that had zero national debt in 1979 (a deliberate self-sufficiency policy that saw Uganda live mostly on its own sweat and resources for eight years - from 1971 to 1979- while growing an indeginous competitive economy based on commercial agriculture and export of mineral resources, a strategy which also fiercely preserved the nations political and economic independence and thereby deterring foreign imperialist control and economic exploitation on a Non-Aligned Nation), a country whose national debt has since been completely forgiven twice in the last 20 years (1998 and 2004 cycles) by the Paris Club of multilateral lenders in a programme called the Highly Indebted Poor Countries (HIPC) initiative, both times under the same clinging Ugandan regime. Yet each time they have immediately returned the country to record levels of debt, this means that the problem is actually someones financial indiscipline habits and the lack of proper implementation of any sober debt management policy.
But at a global economic policy level, debt forgiveness is therefore counter-productive in that it results in increased indebtedness and complacency by those repeatedly being forgiven their debt. A situation that in the long term is not in the political or economic interest of the poor nations, but is definitely in the longterm political interests of the global lending institutions and the world governments behind them.
In the book "Confessions of an Economic Hitman", the foreign power would send so-called experts to developing countries, offer them enormous loans with which to improve their infrastructure, and similarly provide wildly inflated projections of the economic growth these improvements would bring. "Presented to the right people, these bogus figures did the trick".
A deliberately underhand assault on a nation's sovereignty.
"Foreign contractors and more experts would move in and build the pipelines or the drilling platforms or the power stations, the economy would fail to grow anything like as fast as predicted, and the country would find itself in hock to the foreign power in perpetuity - or until it underwent revolutionary regime change from within".
Now these days the excuse being used to the same ends is this obscure "Debt-to-GDP ratio" theory.
While seeming like a robust debt-management tool from a distance, in reality it is an empty statistical fallacy.
The world's leading economy (US) has the highest ratio at over 100%. Yet the second largest economy (China) has a debt-to-GDP ratio of only 16%.
All advanced European nations have a debt-to-GDP ratio that averages around 90%.
If we take the Greek example, we find that they had been at around 98% for ages, but their econom crashed because of one forgotten key element. Like poor African countries, they didn't have the colossal financial resources required to bail themselves out of their own economic calamity, or the capacity to do anything to avoid the crisis in the first place while it was still in its intancy.
Rich countries like Germany and the UK simply bailed out specific, troubled banks "before sh*t really hit the fan" for the ordinary citizen so to speak, and they therefore stopped the crisis from spreading through their entire economies.
Therefore the key component that determines ones capacity to be economically stable, and even avoid an economic crisis if it ever rears its head, is ones financial reserves. A governments level of income and savings.
Meanwhile, poor countries like Uganda barely have any savings. We barely manage to pay just the interest on the national debt as URA struggles to collect taxes due so as to fund the national budget of an ongoing financial year.
So in the event of a crisis like Greece, the only recourse is to beg the World Bank, the EU and/or China for a bailout which most likely will come in the form of more debt.
But the point here is that this debt-to-GDP theory is actually not a measure of economic success or failure. And more worryingly, it is not rooted in any known sound financial management practice. It's just empty.
What we fail to include in our economic model/debt management policy is the growrh of the national income, the growth of the national reserves, and the growth of the national savings.
So that we one day we will not have to continuously take debts from the World Bank/Exim bank for our development programs. So that one day we do not have to take even more debt from them to get ourselves out of any crushing economic apocalypse. This is an economic vision that every developing country has to be working towards as we speak.
As to this "Debt-to-GDP ratio", we have to really ask where did it come from in the first place, who actually invented it, and whose political/economic interests does it actually serve?
Poor countries have to be more pragmatic at looking at their own long term national economic interest, and more realistic in building their own national financial income and savings capacity.
While there doesn't have to be austerity measures throughout the economy, there always has to be some austerity philosophy and an accountants accountability mind in regards to all state resources and state policy. There is always financial implications in any government policy activity. That alertness is what prevents wastage habits as is clearly the case in Uganda  today. It also curbs corruption as has clearly infested the public administration today, and it cuts this sometimes deliberate complacency that serves thieves.
Last year I wrote a public letter to the World Bank/IMF (see letter in link below) asking them how can everything be ok under their Debt-to-GDP theory when some poor countries national debt is growing sometimes 4 times faster than their Gross national income?
Isn't that the clearest indication of ongoing economic mismanagement?

#TovimbaNgaTolinaLumumbaAmin

Thank You.

Hussein Lumumba Amin
Economist, Former Media/Policy Consultant.
Son of His Excellency Field Marshal President Idi Amin Dada
9th March 2019
Kampala, Uganda.

The public letter titled "World Bank Debt Dictatorship" (deliberately down to earth linguistically) which I forwarded to the World Bank itself last year: facebook.com/212665596843/posts/10156579103271844/

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