The National Treasury must now be cautious about taking on more commercial and foreign loans.
As we have stated here before, the emphasis now should be cutting on borrowing.
Despite concerns over the rising public debt load, the government is still intent on pursuing the new loans.
While we cannot fault the government’s quest to embark on infrastructure expansion across the country, time has come for the state to rethink its funding mechanisms.
The government last week raised a Sh202 billion bond, which did little to reduce the uproar over the rate at which it is accumulating debt.
The second Eurobond will cost Kenyan taxpayers a total of Sh323 billion in interest payments over 30 years.
We opine that the National Treasury must now be cautious about taking on more commercial and foreign loans. As we have stated here before, the emphasis now should be cutting on borrowing.
The government must begin relying more on domestic treasuries to cut the foreign exchange risk.
It would also be wise on the government’s part to pay heed to the concerns raised by global institutions like the International Monetary Fund.
The Treasury recently submitted documents to Parliament, which showed that the country’s annual public debt payment bill would hit a record Sh1 trillion in the financial year starting in July.
On its part, the IMF expressed concern over the rate at which the country was contracting new debt and warned that the situation was fast cascading to unsustainable levels.
The warning signs have been there though our policy mandarins have chosen to ignore them.
Ratings agency Moody’s recently downgraded the country while Kenya also lost access to an IMF standby credit facility.
We aver that shrugging off these developments and continuing to pile on public debt is not the answer.
Time has come for the government to practice financial probity if wants to ensure that we don’t burden current and future generations with a massive debt burden.
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