Economist warns Museveni on tycoons bailouts

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Museveni addressing the NRM deligates during the Kyangwanzi retreat

President Museveni has said the government will bail out companies that sold goods to South Sudan government.

While addressing the Cabinet‪ ‎Kyankwanzi Retreat, President Museveni said, “Government will handle companies that sold goods to South Sudan government “differently””.

However, President Museveni said he doesn’t care about companies that import goods into the country.

His Senior Press Secretary Don Wanyama said those who were doing business with South Sudan government but never got paid because of the turmoil there will be helped.

“Their businesses are sinking and Government is considering helping them. Of course in the end and once stability returns, we should be able to square out things with South Sudan.”

The second category of businesses to be helped are those that supplied goods and services to government but haven’t been paid.

“Government owes them money and is under obligation to pay. This is the group the Prime Minister spoke about recently. It’s the group the Treasury P.S. has asked accounting officers to document for debt clearance.”

The last group is perhaps the one that has been making the news with the so-called bailout. This group largely borrowed money from banks for their businesses.

Most have perhaps failed to service their loans. They say banks are taking their property and their businesses collapsing. Several accuse banks of breaching terms of the loans, according to Don.

“For this group, government is NOT offering money. I repeat, there’s no monetary support from government. What government is willing to do is offer to be umpires of sorts between them and the banks. Try to see if they can still engage with banks without the dire consequences of their businesses collapsing. But government is offering no financial reprieve for these.”

Economist warns

Dr Fred Muhumuza

Dr Fred Muhumuza

Dr Fred Muhumuza, an economist says government has an obligation to pay those companies that supplied goods/services but it never paid.

“That’s not bailout‪. One solution to curbing future scenario of distressed companies is ensuring that they are lent at favorable rates,” he said while appearing on a local TV Wednesday.

He said insurance is another solution, especially for companies involved in unstable areas like South Sudan.

“We need to analyze the problems behind the distressed companies so that we don’t simply address the symptoms.”

According to Muhumuza, the Shs 1.3tn planned for bailouts is no small figure.

“Where is it going to come from? Our small budget?”‪

He said some of these companies need restructuring (new management) as a solution. Others simply have to close down.

“A tycoon is someone with a lot of money but even an elephant can fall sick. We have very many elephants (tycoons) stuck in the pool. I am not sure government can help all these elephants.‪”


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