The Jubilee and the Uhuru Kenyatta are already in a slippery slope politically and aggressively as a Dictator, who force himself on the public and uses the government institutions to himself. While promising empty promises with the 4 pillar agenda. That his government are planning to grow debt, you can wonder why, since the growing debt makes the state misuse the revenue, as already now the 20%. That is one fifth of the revenue going directly to pay debt. If that isn’t sounding worrying, then the state should find other ways to gain revenue and not take another Eurobond. Especially with the political climate and the Moody’s downgrade, who is a signal to the world that the premiums and points on the dollar will be worse.
However, Kenyatta isn’t pounding on the people. That is why the news of new Eurobond isn’t positive news for the Republic. Just read the report in Bloomberg, before collected information on the growing debt.
“The ministry also chose Standard Chartered Bank Plc and Standard Bank Group’s Kenyan unit Stanbic Holdings to help with the sale, said the people, who asked not to be identified because the appointment hasn’t been made public yet. Treasury Secretary Henry Rotich didn’t answer two calls to his mobile Wednesday, while Treasury Director of Budget Geoffrey Mwau declined to comment when asked about planned sale on Tuesday. The Treasury will seek to raise $1.5 billion to $3 billion in bonds, with a tenor of up 15 years, according to two of the people. JPMorgan, Citigroup, Standard Chartered and Stanbic declined to comment” (Changole & Martin, 2018).
To take the numbers from Focus Economics who said the Public Debt of GDP in 2012 was 42%, the first year of Uhuru Kenyatta it become 44,5%. In 2014 it had been risen to 45,9% and after the first Eurobond, the rising debt in 2015 was 50,4% and in 2016 it became 53,5%. Therefore, the estimates of the new bonds will make it rise in 2018/19 until about 60%. This combined with the state will pay 20% interest of all revenue to the old debt in 2018. Those has also risen from 13,7% in 2012/13. That is why the state is paying more and more back to creditors in interest, than actually serving citizens with needed services.
“The Eurobond scandal still looms over Jubilee’s government and remains an unresolved mystery in the Country’s treasury records. Corruption scandals also sift down to the County governments with many county governors performing badly in the last 5 years. Many of these leaders have also been accused of corruption and misappropriation of funds meant for development projects” (Konrad Adenauer Stifung, 2017).
You can wonder why the JP Morgan who was implicated in the first Eurobonds want to repeat a corrupt saga again and take responsibility for making the Jubilee able to eat directly from loans they have provided. So even as the elections of September 2017, the government still couldn’t verify the usage of the previous Eurobond. Therefore, the International Banks and Bilateral Monetary Organizations shouldn’t help this government, as they have triggered straight looting of the state. If it wasn’t so, then the state should have the invoices and proof of the used funds from the other loans. However, that is day dreaming and possibly dropped into the artificial dam around the home of Deputy President William Ruto.
For now, we can question the Kenyatta and the Jubilee government will to take up new loans. Because this will add debt, growing rates and because of the political climate, the cost of the loans and the interests rates. The presidency and the analysts at the Ministry of Finance should care and be worried, but I think they are eating of the plate too. So they don’t care about the next term or the future. Since they are making it worse for the coming generations to repay debts and they mature, and the state are losing points on the dollar. Because of the ruthless actions of the Jubilee against the opposition. That will also cost citizens, since they are now paying more for the second Eurobonds. Peace.
Changole, Adelaide & Martin, Matthew – ‘Kenya to Pick Citi, JPMorgan to Advise on Eurobond Sale’ (07.02.2018) link: https://www.bloomberg.com/news/articles/2018-02-07/kenya-is-said-to-pick-citi-jpmorgan-to-advise-on-eurobond-sale
Konrad Adenauer Stiftung – ‘Reporting on Kenyan General Election 2017: A month to the polls’ (August, 2017)