Ichung'wa

EXPERT COMMENT: Treasury must support businesses to survive slump

The government must act swiftly and decisively

In Summary
  • The government just needs to support the private sector to remain vibrant and secure jobs.
  • The Central Bank of Kenya needs to relook into the issue of liquidity ratios
Kikuyu Member of Parliament Kimani Ichungwa. FILE
Kikuyu Member of Parliament Kimani Ichungwa. FILE

 

The government just needs to support the private sector to remain vibrant and secure jobs.

The Central Bank of Kenya needs to relook into the issue of liquidity ratios to support banks in availing more cash to businesses.

 

They also need to create an economic stimulus package that can advance credit at reasonable rates while banks must agree to take a hit on their billions in profit and offer a moratorium for at least three to six months to those servicing loans.

On the government part, it is time now we started to engage with both our bilateral and multilateral development partners and inevitably we must now more than ever before consider a deliberate and concerted effort for loan rescheduling of our stock of public debt.

The rescheduled loans ought to be negotiated in a way that more of our dwindling revenues will now go towards supporting the economy and offering services other than towards loan repayments.

The government must also have a rescue package to cover the private sector in areas like tourism, (tours and hotels ), airlines that will be hard hit by this pandemic and this could include tax reliefs and use of an economic stimulus/protection fund that will enable the businesses in the affected sectors to remain afloat and not lay off staff.

The government must also focus on the post-pandemic period especially in food production ( agriculture) to ensure we have enough food to stem inflation in the event food production is affected by the pandemic and the locusts.

We must also take advantage of the lower global crude oil prices to stockpile for the post corona season while CBK also intervenes to ensure the shilling is protected against further slump against world currencies.

The moratorium should be on interest for the first three months for borrowers to repay loans interest-free and after the first three months charge interest at half the rates for a further three months.

 

That way both individuals and businesses will have more disposable income to spend during this period and secure jobs.

The Chairman of the Budget and Appropriations Committee spoke to the Star