A team from the International Monetary Fund (IMF) has been in the country holding discussions on a new precautionary stand-by arrangement and what is referred to in jargon as Article IV consultations.
As we all know, all members of the Fund must engage the IMF under the Article IV framework regardless of whether one is on an IMF programme or not.
It seems to me that we are well on our way to an IMF programme. I think that this is a possible development. Indeed, what we need now is not the money it will be giving us. The positive thing about IMF programmes is that they introduce additional oversight on how we can manage our economy. In terms of oversight over the fiscal strategy the government has been following, we must accept that Parliament has woefully failed.
We need an independent party to do what Parliament and all other institutions of oversight, including such the Controller of Budget, the Auditor-General have failed to do,
The intellectual dishonesty displayed by the National Treasury especially when reporting on basic thing such as revenue forecast, reporting on public debt has been simply mind-boggling. Until the other day, the narrative from the Treasury was that our public debt levels were sustainable. Even when all the evidence was that public finances were in the deep red, the standard refrain was that we did not have a debt problem.
The reality check time came in June last year when the National Treasury openly admitted that admitting that the country had breached legal and constitutional debt legal ceilings.
With the make-believe narrative about how debt levels were sustainable having run out of tarmac, it was time to make an about-turn and seek parliamentary approval for an upward adjustment to the ceilings.
Parliamentary approval was needed to bring public debt levels in line with what is stipulated in the law; namely, the Public Management Finance Act. Where was Parliament when these limits were being breached?
The questions we did not ask were the following: Where was Parliament when the public debt ceiling was being breached? Where was the Auditor-General? Where was the Controller of Budget? I think being on an IMF programme will bring credibility to the dodgy numbers and statistics the government has been putting out. I am yet to see
Clean and comprehensive statistics giving us the full picture on debt especially details such as outstanding disbursements on existing loan commitments, the level of pending bills at both the national and county governments and contingent liabilities from murky debts and external loan guarantees to parastatals.
The government should reveal to us the statistics and details about all the commercial US dollar loans that we have contracted in recent years. Isn’t it just incredible that we have contracted US dollar loans that cost us as much as 10 percent per annum? This at a time when interest rates in Western markets are at one percent. Is it not time we conducted thorough investigations into all these dodgy loans on our external debt register for corrupt activities? I hope that an IMF programme will also provide impetus for transparent investigations and audit of the pending bills conundrum.
The truth is verification of pending bills both at the national and county government levels have become murkier by the day.
What is my point? It is that we still have major credibility issues with the numbers and statistics not only on the public debt but on the true size of the fiscal deficit. We are yet to appreciate the fact that part of the Greece debt crisis came about because of the credibility of macroeconomic figures.
With exaggerated GDP growth numbers, we have ended up with exaggerated revenue targets and unsustainable budget deficits. We have been crafting spending plans that we are incapable of funding.
An IMF programme will inject a dose of honesty into some of these key numbers. If you look carefully at our history, you will notice that the biggest scandals happen when we are not on an IMF programme.