[SIZE=5] Tough times as Sh140b debt due amid costly campaigns[/SIZE]
By Alphonce Shiundu
Today, when President Uhuru Kenyatta goes to church and kneels down to pray, he will be seeking God’s attention, the country’s understanding, patience of the masses and the grace of Kenya’s creditors whose Sh140 billion loan is due.
The latest bulletin from the legislative think-tank on the economy and the budget predicts a troubled future as the clock ticks to the August 8 General Election.
Packed inside the six-page dispatch seen by Sunday Standard is a worrying assessment that the splashing of campaign billions, erratic weather and army worms will dent the economy and prolong the biting inflation and food crisis.
Splashing billions
The Parliamentary Budget Office (PBO) is also worried that as politicians move around the country splashing billions in campaigns, they will not only increase supply of money in the economy, but are also likely to drive up consumption and unless the National Treasury and the Central Bank of Kenya (CBK) step up their game, the cash-splash will push up prices of goods and services. In simpler terms: Things are going to get more expensive.
The report has also warned that the global deal by oil-producing countries to cut oil supply, coupled with the massive Sh140 billion in debt repayments that have to be made, will eat into the government’s foreign reserves and could upset stability of the Kenya shilling – in other words, you will pay more for the dollar.
As if that is not enough bad news, there is a bold prediction that just like it has happened before in all election years when the economy slows down, this year will be no different.
The result? Missed revenue targets, huge budget shortfalls and more borrowing to fill that gap! Besides, they attacked M-Akiba as a con by the government to get cheap money from the public because the interest rate offered on the mobile-phone-based bond is lower than the rate of inflation. Looked at together, all these factors portend an economic and political nightmare for a government that is struggling to steady the ship against a rising tide of an Opposition that has taken advantage of the rise in the cost of living to woo angry and hungry voters.
There is also a verdict that Kenya is living beyond its means because it has already surpassed the target for the external debt, which had been set at Sh1.79 trillion, but according to the latest report of the National Treasury tabled in the National Assembly on Wednesday, it now stands at Sh2.01 trillion.
“This implies that there has been fast accumulation of external debt above the projected levels; this will adversely affect the economy in the medium to longer term when the country will be required to part with high interest and debt repayments, which are normally a first charge on Government revenue. It also makes the economy vulnerable to increased exchange rate risks,” the report says.
It is a rare blunt assessment of the economic situation at a time when the government has…