Retiring syndicated loans good overdue move

Acting Treasury CS Ukur Yatani yesterday said the government is planning to retire expensive syndicated loans.

This is a good idea especially because economic growth is slowing and public debt remains high. Demographic changes and technological advances are reshaping the global economy.

Everyone’s opportunities — for a good education, job, healthcare and retirement income — income depend on tax and spending choices the government makes.

Commercial loans and other external short-term facilities are the reason Kenya has found itself in a debt trap, borrowing from Peter to pay Paul and exerting unwarranted pressure on burdened taxpayers.

Kenya has spent huge chunks of the three Eurobonds over five years to settle commercial debts from international banks in Europe and China.

In May, Treasury was forced back to the international debt market where it secured a Sh210 billion sovereign bond — ostensibly to use at least Sh75 billion or 35 per cent to service the first five-year tranche of the 2014 sovereign bond.

The time factor is only one problem with these short-term international commercial loans. Interest is high and pegged to currency fluctuations.

The more the shilling depreciates, the more Kena pays.

Whereas we support Yayani's move, he needs to provide a detailed way forward.