Wamuzi News Ke
The National Infrastructure Fund (NIF), which the government has highly praised as the mainstay of the five-year development plan, has been categorically labeled by the influential Kiharu MP Ndindi Nyoro as a terrible “debt trap” among the most disastrous dreams.
In the midst of this harsh condemnation, he has warned that the Ksh5 trillion ambitious financing device might be the cause of a full-blown economic crisis in Kenya that would stretch the country’s financial resources to their limits, and thus, the dire straits similar to those faced by Ghana just recently would be their lot.
The Kiharu MP, while the national debt situation was getting tenser, criticized the government’s borrowing by saying that the NIF was nothing else but a very crafty way of loading up another debt upon an already battered economy. His warning is based on the terrifying possibility of a debt haircut, where the consumers of government bonds, among whom are the millions of pensioners, will be the ones who lose so much of their savings.
As a country, are we going to wake up to reality, or will the economy through its hardships wake us up, and the outcome will be very unfortunate?” These were Nyoro’s words of caution. “The very bad thing you have to put up with if you are not careful with your finances is that the government may be saying at a certain point, ‘I am aware that I owe you 100 million, but from now onwards, you will only get 70 million.’ That is giving you a haircut, and it will be a disaster.”
The Kiharu MP fortified his pessimistic forewarning with startling data concerning the current trajectory of the country’s public finances. The calculations from the data Nyoro quoted indicate that the government’s borrowing has gone out of control, hitting a rate that far exceeds the legal borrowing limit or target.
According to the skies, Kenya is presently borrowing this mind-blowing KSh 3.5 billion daily, which is over KSh 100 billion a month. The government is paying off the interest on the loans and managing the huge loans instead of the private sector benefiting from the borrowing and hence the growth.
Nyoro said nothing could be further from the truth than the assumption that the country was getting loans exclusively for development; one would think that other cheaper measures might be considered besides focusing on the NIF, which is expensive. Moreover, he drew attention to the “backdoor borrowing” practices that are rampant in the government, where it uses revenue sources such as fuel levies for secured loans, thereby creating a hidden risk over and above the already existing visible debt.
In fact, one of the most disconcerting elements of Nyoro’s alert was the persistent insistence that Ghana’s recent debacle—where the country defaulted on some loans and imposed harsh austerity measures—was not a hypothetical scenario but a warning that was directly directed to Nairobi.
He challenged the National Treasury officials to take a “benchmarking trip” to Accra and converse with the people who lost their savings, thus driving home the reality of economic default.
The government, which boasted about paying off a big chunk of its Eurobond debt with the help of new loans, insists that its borrowing is a tool to make necessary public transformations happen.
Nevertheless, Nyoro’s alternate viewpoint sees the colossal amounts not as pathways to wealth, but rather as the shackles of economic slavery that will be imposed on the young generations.
