STATE OF THE ECONOMY

Yatani, the truth shall set you free

The Kenyan government has assumed it serves itself and has the fiat to lie to its employer – Kenyans

In Summary

• Treasury CS Ukur Yatani not only denied the government is broke and in need of Sh75.5 billion debt relief, but also said it had taken an offer for the relief.

•  No sooner had he finished gushing out fiction than the IMF on Friday announced Kenya had agreed to take the Extended Fund Facility

Treasury CS Ukur Yatani when he appeared before the Senate Finance committee on November 26, 2019, over pending bills.
ON THE SPOT: Treasury CS Ukur Yatani when he appeared before the Senate Finance committee on November 26, 2019, over pending bills.
Image: EZEKIEL AMING'A

“If you go to Mathare Mental Hospital, none of the patients in there can agree that they have a mental problem. Doctors know it, but the patients (deny) it. It is the same thing with Uhuru's Cabinet. We all know the country is broke, but none of Cabinet CSs will acknowledge this fact!”

That was Re Pepper on Twitter, scalding Treasury CS Ukur Yatani for the courage to camouflage reality in the Star’s story, 'Yatani dismisses report on Kenya being broke' in reference to a Daily Nation expose.

This is the dismissive dark humour Kenyans use as protection from constant government lying, at its best. There is no guessing who the Mathari Mental Hospital's virtual guest patient was.

Yatani not only denied that the government is broke and in need of Sh75.5 billion debt relief, but also said it had taken an offer for the relief.

This action leads to deferring repayment, meaning defaulting on debts. This then downgrades Kenya’s credit rating that would cripple Kenya’s ability to borrow.

But with a straight face, Yatani on Thursday wrote, “There has not been any decision whether Kenya is going to apply for the G20 debt service suspension initiative," adding that he was “encouraged that the economy has begun picking up despite the pandemic”.

No sooner had Yatani finished gushing out fiction than the IMF on Friday announced Kenya had agreed to take the Extended Fund Facility, a loan only given to countries 'experiencing serious payment imbalances'.

 

With that, Yatani had been caught lying to Kenyans on the state the economy. He made an unapologetic about-turn on Monday telling Bloomberg he’s negotiating Sh400 billion with IMF and World Bank.

But he needn’t have kept lying; after all. In an analysis of the 2020-21 budget, the Parliamentary Budget Office projected external debt repayment default and advised, “The government should expeditiously seek moratoriums on debt repayment for at least one year.”

Yatani could’ve hidden there, even blamed Parliament, the way he is blaming counties for not paying pending bills when he knows he hasn’t disbursed any money.

But trust a man who always appears to be out of his depth, afraid of himself and threatening to fold into his skin, to goof.

Nonetheless, the man from Marsabit county ought to know that an obviously battered economy whose government can’t foot bills, is behind on salaries and disbursements to the counties and whose social services are grounded is all one needs to say we are broke.

Simeon Nyachaye, then Finance minister, said it and is still alive. Yatani has no excuse, other than fear of himself.

Since 2013, the Jubilee government has been on a spending binge on flashy projects funded by loans, but with no immediate economic returns. We were blinded by the uneconomic SGR and are now hurtling into the shadows of Nairobi Commuter Rail System.

Though the current budget is at Sh2.9 trillion against exaggerated revenue of hardly Sh2.2 trillion, the debt portfolio has sprinted to an amazing Sh7 trillion-plus.

Of this, Sh835 billion has been borrowed since March alone. And the loans appetite isn’t about to be satiated: President Uhuru Kenyatta added another Sh18 billion in loans from France and the EU in October.

That Kenya is defaulting on loan repayments isn’t a secret Yatani can own up to because projected revenue has since been trimmed by stalled economic activity, non-productive loan investments and Covid-19. Our public debt hit Sh1.2 trillion in September alone. In the circumstance, it makes sense that Kenya should accept the IMF loan, but what does this mean? We’re now not creditworthy.

To stay afloat, we will have to make do with either cutting down on binge spending or raise taxes. The government is the largest spender. To cut spending, you forego stimulating the economy and thus expect reduced revenue. To avoid that, you must spend.

Unfortunately, there aren’t easy loans to spend anyhow anymore. Instead, we seek to avoid auctioneers and declare bankruptcy. Zambia has already announced it is broke after defaulting on debt payments.

The option of increasing taxes isn’t feasible either. Since March, when Covid-19 reached Kenya, thousands of businesses have shut down or scaled down leading to massive job losses. Kenyans still holding out have no disposable income to spend. Tax collection has rapidly declined and tax cuts to cushion against the pandemic reduced revenue.

But there is a premonition. Because of a passive citizenry, Yatani will go for increased taxation and blame 'coronavirus'. Who should know better than the British charity Oxfam, which warns that the IMF agreement will result in “deep cuts to public healthcare systems and pension schemes, wage freezes and cuts for public sector workers such as doctors, nurses and teachers, and unemployment benefits, like sick pay".

I’ve used the 'we' collective pronoun deliberately in an attempt to provoke Kenyans to rediscover themselves as citizens. That means refusing to be lied to by those we’ve employed in government. The loans are accrued in our name. But when it comes to accountability, we allow government to lie to us. I doubt a company board of directors and management who constantly serve fake accounts can survive the wrath of shareholders.

Kenyans are shareholders who have appointed the government to run its business of state. These include prudent management of assets, liabilities and efficient delivery of services. This covenant is enshrined in Article 1 of the Constitution, where all sovereign power belongs to the people and shall be exercised directly or delegated to government.

Like company boards and management, government and its agencies don’t have the latitude to mislead citizens on the state of the nation.

But increasingly, the Kenyan government has assumed it serves itself and has the fiat to lie to its employer – Kenyans. But governments aren’t masters of their own, neither are they the masters of citizens. Like the board and management that mislead on the state of the company, governments get fired. But only by a questioning citizenry that is ready to persist in the laborious process of elections.

Unfortunately, the state of the economy isn’t always on the table at election time, replaced by issues cloned as ethnic interests. This is why frustrated Kenyans let off steam on social media with dark humour. But such frustration is self-inflicted. Kenyans ought to replace dark humour on social media with mobilisation against mediocre government.

We must call out lying officialdom and parody ourselves constantly — it’s the economy, stupid! — until election time. For me, the candidate and party with whom I agree will spend my taxes sensibly and  get my vote.

Kibisu Kabatesi comments on current affairs