Of it has crowded out private sector. A lot of the banks have refused to lend to the private sector and did so to GoK instead.
Even worse, most of this borrowing was done to finance non-income generating activities.
Secondly, the borrowing today will effectively impact future ability to borrow given the rising interest repayment.
Recurrent non-productive expending has increased-note we have 42 ministries and 4,000 commissions without any reductions elsewhere.
And ofcourse nobody has factored in the leakages via corrupsion et al

I also think they have crowded out the market, and BD has done a great article. I wonder how far the CBR will decline in future...if they were optimistic about economic growth, they may be worried about too low interest rates. Let's see how investors respond to the Tbond auction this month. I wonder if returns will be high enough to entice investors.

i dont think there is anything wrong or any worry with G.O.K over borrowing especially since most of the debt is reproductive and capital expenidture based...

if all the debt taken is put in the investment which it is meant for.. then i believe that the debt will pay for itself in the long term...

@scubi, all government paper including cash represents credit(gova borrows and not guarantees on gold holdings etc as some would want) . i think when the governor spoke, he made it clear that he was forced to spend because of
1. Maize imports
2. Emergency Power generators.
In other words he was asking economist, now that we have good rains, what do you expect? A government bond can be used to mop up liquidity as well as to allow government to spend when the public is not borrowing to encourage public borrowing and investment. The goverment may also translate economic gains into print which was the desparate governors erstwhile only option. Its my opinion that the gova is indeed indicating its control on the shilling through this move averting fear of inflation especially given recent economic gains where it was busy converting gains to cash 'to pay for maize and generators'. If oil is found tomorrow, it will issue bonds and cash even more liberally on obvious gains ahead(dont worry am also confused by what i am writing)

@guru267. Yup, ur right. I understand borrowing for stimulus spending, but I think the past auction wasn't stimulus, so I wonder if they'll be just as accountable. You don't talk much about the macro trends in Kampala...any gud UG vibe?

@Intelligentsia. Those are excellent examples... water situation, I remember they had to drain some dam sometime ago to repair it, I wonder how much could have been saved if these long term plans were set in motion to manage the water dams, even forests (glad most r being fenced). same thing with the power deficit...reactive rather than proactive policy...they need IPPs to swoop in quickly to build infrastructure b4 the 2012 elections...interestingly I looked at my power bill again for February, KPLC is charging 674 cents per kwh for fuel cost adjustment, a friend of mine got 783 cents (guess I'm the lucky 1...but 674 is about the same level they were charging six months ago b4 Aggreko ep)... they're spending on food imports but I don't know how much money has gone into developing new food reserve crops, ones that can be stored, other than maize/wheat somehow (don't know if possible) more resistant to drought conditions...I mean how do the Israeli guys farm stuff in the desert...I don't know but there must be away to avoid this, irrigation methods, isn't that what uni's like JKUAT are all about, being proactive. but how u know so much about armed forces, what's a Mig-29 Fulcrum? Dude I wasn't alive 30 years ago but wud be interested in the kind of fire power our armed forces have now. Last time I saw them wheeling tanks through our country, it caused an uproar.

@much know. u have a way with words. I don't think I make sense half the time either, ... what if the private sector recovers, economic gains continue, they start borrowing huge & govt finally spends stimulus will cbk's tools be sufficient enable them to avert inflation...u said they're using the govt bond to mop up liquidity, so wud that mean to mop up further liquidity they'll need to issue more bonds, or suspend spending (temporarily) on projects already committed to. Looks like the power generators will be used less in the following months and the maize shortage in April will be allievated in time, but what will we be stick with us...all these govt bonds, of which GOK can only afford to pay interest.