DEBT TRAP

Enough is enough with the loans - go into the streets to protest

If the money borrowed was clearly put to good use, then the complaints would not be there

In Summary

• Debt repayment has now superseded all other recurrent expenditures.

• Presently, the government has reached a stage where it is borrowing to service its debt repayment.

Graph showing Kenya's debt.
IN TOO DEEP: Graph showing Kenya's debt.
Image: STAR

Last week, Kenyans learnt of a new Sh255 billion loan facility granted to the government by the International Monetary Fund.

This came hot on the heels of other loans the country has received from various sources, including the Chinese government, which is now believed to be in the process of acquiring state assets such as parastatals to offset the loan payments. The Kenya Ports Authority, one of the few performing parastatals, is one such parastatal that China eyed as payment for the inflated standard gauge railway.

Unfortunately, despite the huge public debt, the government’s appetite for loans continues to grow. Governments borrow money when they cannot balance expenditure against the revenue collection. For any government to operate soundly economically, it must be able to match what it wants to do with what it has in its coffers. Revenue mainly from taxes should be sufficient to cover all its costs, particularly the wage bill and development. However, in our case, this has not been the trend for almost two decades now.

Media reports indicate that the last time the government balanced revenue and expenditure was in the 2003-04 budget which was delivered by then Finance Minister David Mwiraria. Since then, the country has not been able to balance its books, leading the Parliamentary Budget Office to warn legislators of unrealistic budgets.

Debt repayment has now superseded all other recurrent expenditures. Presently, the government has reached a stage where it is borrowing to service its debt repayment.

The Jubilee government has been receiving loans throughout its time in office. This means it has never been able to balance the books since it came to power.

In the last eight years, the government has borrowed about Sh5.3 trillion to take the public debt to an all time high of Sh7.1 trillion. Its officials argue that the money is needed to finance the huge development projects across the country, including the SGR, super highways, pipelines and the ports.

However, while some of these projects can be seen, the clear fact is that corruption has remained the order of the day. Take the SGR project, for example. Looking at the sum total cost, Kenya has ended up paying for the diesel train more than twice the amount Tanzania will be paying for its electric train.

This means Tanzania is building an electric rail at half the price Kenya used to build its SGR. In 2020, the court ruled that the procurement of the SGR project, which cost Sh360 billion, was flawed. Clearly, the government is engaging in illegal processes on behalf of Kenyans.

It is with this background in mind that Kenyans this week took to social media to lambast the government and the IMF over the recent loan deal. Kenyans believe for sure that the money borrowed is not for the sake of mwananchi but to satisfy the greed of a few.

Government spokesman Cyrus Oguna recently asked Kenyans to stop “crying” at raised taxes and questioned where they think money to pay people like him should come from. This shows the thinking of those in government – the people can suffer and complain all they want, as long as our bellies are full, it is okay.

At the end of the day, if the money borrowed was clearly put to good use and Kenyans saw what was done with it, then the complaints would not be there. However, when cases of corruption increase and people speak of walking out of government offices with money in sacks, then Kenyans have all the right to complain.

It is time Kenyans stood up and told off the government on its unending appetite for loans. Social media alone is not enough. Kenyans must exercise their constitutional right under Article 37 and go out to the streets to protest. Enough is enough already with the loans. This is our country and we must defend it.

(Edited by V. Graham)