As a country, we are not safe as far as the debt level is concerned. We are far from being safe.
The level of external debt is so high it is actually unsustainable.
What this means is that we are not able to service our debts as they fall due from our local revenues.
So what we are doing is we are borrowing money to pay debts that have matured.
What is happening is that we are taking a loan to pay another one that is due.
This is very dangerous for a country because we are in a debt trap.
It means we are creating more and more debt and the risk of defaulting on repayments becomes very high.
We are not safe at all.
There are no revenues coming in to settle the debts, we are not able to generate much.
Our foreign incomes are low. Most sectors, like tourism, have all been affected by the Covid-19 pandemic.
When we don’t have inflows, even in foreign income, servicing those loans and even borrowing more in foreign currency becomes very expensive.
So, what should the government do?
The government should simply stop borrowing.
These are the same things we have repeated for years to this government.
How would it stop borrowing?
It stops borrowing by reducing its fiscal deficit, that is, it should slash public spending.
The reason we are borrowing is that our spending is more than our revenues collected by the Kenya Revenue Authority.
In a nutshell, until and unless we put our expenditures within the revenue level, we will continue borrowing and that will be riskier for the country.
The other thing is what do you do with the existing debt?
The government should apply for debt relief. They can also reschedule some of the dent and that kind of things.
The only long-lasting solution is for government to stop borrowing and reduce its fiscal deficit by cutting down on expenditures so we do not borrow again.
The former Mandera senator spoke to the Star
