“[Credit is a system whereby] a person who can’t pay, gets another person who can’t pay, to guarantee that he can pay.” – Charles Dickens
We have seen it for a while, as the Kenyan government have spent much more, than they are actually collecting revenue and getting grants. The Jubilee government have not only siphoned funds, but borrowed funds like a drunk sailor. This administration have not considered the implications of the loans and the deficit, they have created.
Uhuru Kenyatta and William Ruto has ordered this ship, it has been known. The Grand Corruption by this government alone has made huge losses. Jubilee knows this and the ones that has followed this government. Have seen it with time and discussed it.
Now suddenly Dr. Wagacha says this:
“ Dr Mbui Wagacha, a policy analyst who left the advisory role in the top office last December after five years, says Parliament has looked the other way as the National Treasury gave the Kenya Revenue Authority (KRA) unrealistic revenue targets only to fall back on debt and expenditure cuts. “We borrowed so much and our headroom for debt has narrowed … there was an over-commitment to capital borrowing and that has left us with narrow headroom for debt,” said Dr Wagacha. “If you look at 2011/2012, we were spending only about 11 per cent of GDP (Gross Domestic Product) directly to repay debt. We are now talking about 57 per cent of GDP in public debt.””(Alushula, 2019).
We know that the state has issues, when the Jubilee are putting austerity measures given by the International Monetary Funds (IMF). While the Jubilee are taking more debt, taking more infrastructure grants and loans, as well as the state is not having the revenue to cover the deficit that has created. This is why the state is paying more of the GDP now, compared to what they did when Kenyatta and Ruto took power.
The Jubilee government could have carried it differently. The Jubilee have used the Eurobonds twice to get fiscal stimulus, but it was also a loan. Therefore, the Jubilee will have to repay those. Just like it has to do with the Chinese loans for the Standard Gauge Railway (SGR) and others, loans that the state has absorbed within the years of Jubilee.
Dr. Wagacha is speaking the truth, but the state has taken the Kool-Aid. Will it find a way to move forward wisely or will it continue the negative cycle of loans to pay-off the old loans, instead of finding revenue and creating a healthy economy. If not just living within its means and not pushing for more, than you can pay for without credit. Peace.
Patrick Alushula – ‘Ex-Uhuru adviser says debt may affect growth in Kenya’ 05.02.2019, link: https://www.nation.co.ke/lifestyle/smartcompany/Ex-Uhuru-adviser-says-debt-may-affect-growth-in-Kenya/1226-4967482-b1tau4z/index.html