During the Forum on China-Africa Cooperation, President Uhuru Kenyatta posted on his Twitter page photos of him meeting Chinese President Xi Jinping on the sidelines of the meeting. China announced a $60 billion (Sh6 trillion) kitty for Africa’s development in the next three years.
KoT pleaded with the President not to take any more Chinese loans since what we currently owe them is choking our economy. Other comments were hilarious, with some advising him to borrow from the Deputy President, who seems to have a bottomless account.
The comments on the President's tweet, coupled with the reaction to the 16 per cent VAT levied on petroleum products, are a clear testament that majority of Kenyans are slowly appreciating the adverse effects of foreign financing on our economy and the overbearing nature of international financial institutions.
Over the years, CSOs and economists of repute have warned about the sustainability of our growing debt and questioned the government’s raw appetite for huge infrastructural projects without proper funding instruments. Their argument has always been that no proper cost-benefit analysis has ever been undertaken to ascertain whether these projects have a higher return value to the cost of the investment.
All this has happened even when credit rating firms and global financial institutions have been advising against taking more loans and instead concentrating on fiscal consolidation to arrest the spiraling debt.
The framers of the 2010 Constitution and the Public Finance Management Act, 2012 were alive to this aspect when they obligated Parliament to prescribe the terms on which the national government may borrow, demand for periodic reporting on our total indebtedness, highlight the purpose of the loans procured and the modalities employed to repay the loan. Further, the Public Finance Management Act obligates Parliament to approve loans to be procured as factored in the budget estimates.
These were never meant to be flowery idioms in our laws, but guidelines to shepherd the National Treasury mandarins to exercise due care in committing the country into debt. Over the years, through acts of commission and omission, Parliament has abdicated this duty to the National Treasury as far as setting borrowing ceilings, debt procurement, usage and management of loans is concerned.
Ideally the Sh100 billion precautionary loan that Kenya negotiated from the International Monetary Fund should have been subjected to parliamentary interrogation to test the efficacy of the conditionalities attached to it.
Perhaps better financing means would have been sourced to address the country’s fiscal deficit rather than resorting to imposing new tax on petroleum products. For now, the National Treasury ship has sailed with the IMF tide and to avoid an economic meltdown, we have to align with the unpleasant conditionalities courtesy of our parliamentarians.
Legal affairs officer, ODM