Suba MP John Mbadi has warned of tough times ahead as the country struggles to service its foreign debts.
He said that this year, the Jubilee administration is expected to pay more than Sh450 billion in foreign debts as part of the more than Sh3 trillion accrued over the years.
“In the next three years we will be repaying over Sh800 billion. With our economy dependent on tax collection, it means that a lot will go to the repayment of the loans,” Mbadi said.
In 2015, more than Sh365 billion was paid.
Last year, the government realised slightly over a trillion in tax revenue, meaning that a huge budget deficit awaits as the longterm loans committed under retired President Mwai Kibaki's regime mature in June.
Equally, the short-term loans accrued under President Uhuru Kenyatta's Jubilee administration mature at the same time as those under the Kibaki's leadership, putting the country at a financial crossroads.
“People have made noise about last year's financial crunch in government. But I want to tell them they are yet to see more. Talk of failing to pay government workers, this is what we are likely to see,” he said.
Mbadi, a member of the Public Accounts Committee of the National Assembly, said part of the financial mess the country is expected to experience has been committed by the Jubilee administration.
“When they took over power in April 2013, the country's foreign debt stood at one trillion. For the three years they have been in power, the figure has tripled, endangering the country's key infrastructural projects and stability,” the Suba MP said.
This comes amid fears that the more than Sh237 billion realised when the government floated its debut international sovereign bond in June 2014 may have been misappropriated.
The sovereign bond is among the debts the government must pay by this year.
Mbadi, who is also an accountant, said it will be hard for the government to repay the debts when the due date comes because there is no roll-over mechanism that will give the current administration room to negotiate and repay them at a later date.
“It is a risky affair and very punitive at that, especially if the government defaults, because there is no clear indication the debts will be settled as agreed,” he said.
Mbadi said the government should have worked to bring down the budget deficit, grow the economy and do the bond from a stronger position.
The country's grim picture is worsened by the lack of government-driven initiatives to encourage economic growth – providing incentives to local industries to generate revenue and the need to deal with harsh economic conditions such as terrorism that has affected tourism.