Earlier last week I saw a post on social media repeating a point that has been made on the poor state of the economy, despite government denial. The post was on performance of a few businesses.
At one supermarket, he counted 10 customers carrying little shopping. In the next, the workers were busy on their phones since there were no customers to serve. Third, a local bar was closing due to inability to meet operating expenses. Lastly, he recalled several international organisations that were shutting down due to similar reasons.
It is time for the country to ask itself hard questions. What is the real state of the Kenyan economy? Every year the government prepares a budget detailing the projected revenues and revenue raising measures.
Invariably, the budget continues to be ambitious in recent years. However, it is increasingly failing to act as a true measure of the country’s economy. This is as a result of the failure to meet the revenue targets and the increased appetite to borrow to meet the country’s obligations.
Debt is not necessarily a bad thing. The Constitution recognises that one of the sources of revenue for government is loans, be they from domestic of external sources. The critical debate is how much the debt is, its repayment terms and what use it is put to. Unfortunately, each of these questions has been a subject of controversy.
The Constitution requires that Parliament set the terms on which the government may borrow and the reporting requirements.
The Public Finance Management Act elaborates on this obligation. It requires the Cabinet Secretary, every four months, to write a report of all loans and their balances, their terms and how they have been used.
Clearly, there should never be a situation where parliamentarians, as the people’s representatives, are not fully appraised of the country’s debt situation.
Unfortunately, the reality points to a different picture.
First, have been discussions on when the first loan for the standard gauge railway (SGR) was due for repayment. The Treasury Principal Secretary responded that the due date was early 2020. The fact that it is not publicly available is worrying.
Secondly, a few weeks earlier a Member of the National Assembly raised concerns bout the country’s debt situation and its management. He complained that Parliament was in the dark about the issue and may soon pass a law that limits the amount of money that the country can borrow.
One then wonders whether parliamentarians are fully aware of their constitutional obligations, and if they are what they have been doing about it since the 2010 Constitution was passed?
Thirdly, Kenya has just issued another Eurobond of Sh210 billion.
Taken against the statements about the debt situation in the country, it is time there was greater transparency on debt, a discussion on repayment obligations and an assessment of its implications on our development trajectory.
If the analysis reveal that we are in a financial quandary, then it may be time for both hard decisions and stimulus packages like the one after the financial crisis a decade ago to jumpstart the economy.
Unless such measures are taken, the country may be quickly sliding towards a crisis that may be difficult to get out of.
As it is, the financial challenges facing the country are beyond politicking. It is time to stop burying heads in the sand and make decisive steps towards addressing the challenges.
Discussions about salary increase for categories already highly paid when the low-level workers could not get the basic salary increase during this year’s Labour Day is not a step in the right direction.
Budget will soon be read in the House. It must be time for reflection on debt situation. Unless the Cabinet Secretary for Finance does that, we will be taking a step closer to making project Kenya unviable. That we cannot afford to do.
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