Eurobond 3.0: Marching the state into a debt-trap!
“Kenya has accepted offers of Sh210 billion in a third Eurobond it has named the “Kachumbari bond”, which will be used to repay other loans and fund unspecified infrastructure projects” (Daily Nation, 18.05.2019).
There are already been several of warnings on the rising levels of debt under President Uhuru Kenyatta and Deputy President William Ruto. The Jubilee has raised levels to unbearable levels and certainly, this will hit the economy at one point. As the grace-periods and the repayment levels will eat huge parts of the budgets. This is because of the reckless spending, the grandeur of grand corruption and whatever else the state has spent their ill-gotten funds at.
Because, this isn’t funny, this is spoiling the future and destroying the trust of the financial institution, the value of the currency and also the financial markets. This is all done because of an political elite has found a way of eating, which will in the end cost the state more in the long run. It is a quick fix to take up a loan, but the loans has to be repaid and usually with interest. That means it will not only cost the initial loans, but also the added interests. Plus it will be more damaging if the state cannot pay for it and have to default on the loans. Than it might loose its collateral and has to give away valuable assets, licenses of extractions and others just to barley get by.
This will be legacy of Kenyatta and his Jubilee Party. As they pre-occupied with one scandal after another. As the State is busy scheming finding new ways to eat, instead of finding ways to serve the public. The elite is so hectic about it, it needs to rehash old tricks to fund themselves.
When you have to take up loans for unspecified infrastructure projects, you know its not really that serious. You are just gambling on debt, raising debt and creating an evil cycle of debt management, which in the end will make the state poorer and poorer. As you have to raise more and more funds to have capacity to serve the old loans, while taking up new to cover for the old ones. In the end giving an alcoholic one more beer on credit and not expecting him to want another one after his finished with the first one. That makes you a fool, not cool and aloof.
There isn’t anything good coming out of this, unless you buy yourself land, house and even pay off old creditors, but why care right? Because, you have to down the line find new creditors to keep up with the newly created debt. You might cover for the old debt, but at one point you have to pay for this one too. Its a cycle of slow-destruction, instead of gaining revenue in a natural order. This is just bloating the financial markets, creating a giant bubble, which at one point will burst.
Than, you have a headache you cannot handle. This should be known by the Presidency and the Cabinet itself. This should be basic knowledge, but seemingly they are to happy to eat. That they are filling their pockets and ensuring their wealth is created. While the public in desperation should wonder, why could their representatives misuse their trust, misuse their power and their ability?
Why? Could the state take up three rounds of massive loans, which has nothing to show for. Other than more debt and becoming trapped in cycle, where you only loose and never win. Peace.