State must exercise caution in borrowing
A document prepared by the National Treasury for Parliament on the government borrowing in the seven months— September, 2019 to April, 2020—shows the State has signed 12 loans totalling Sh132 billion.
This adds to the estimated Sh6 trillion national debt, which is about 60 per cent of the country’s Gross Domestic Product(GDP)— and according to conservative projections, it will hit 64 per cent.
But even more disturbing is that the government in its self-flattering and self-effacing approach over the debt, was able to bulldoze through Parliament to the raising of the borrowing ceiling to Sh9 trillion, which is 70 per cent of GDP.
Its argument was that it needs the money to invest in capital intensive projects and lay the foundation for economic growth. It also said it had the ability to honour its debt obligations.
Granted, this sounds good economic thinking, even ambitious, but the reality of growing poverty and inequities point to an evolving cruel narrative that scares every Kenyan, especially Wanjiku whose fortunes have plummeted into a hole of despair by the coronavirus pandemic.
The current level of indebtedness is a national security threat, socio-economic and political stability not just the current, but future generations— and the grimness of tightening of crippling debt noose and gets more painful because of slowed business activities, and depressed productivity.
Understandably, the government in April borrowed more than Sh5 billion from International Development Association under for the prevention, detection, prevention and building response capacity to the deadly Covid-19, which has infected 2,340 and claimed more than 70 lives in the country.
Yet, despite the measures and protocols announced, the distress caused by this disease is increasing exponentially by the day, especially with the dusk-to-dawn curfew and partial lockdown that have led to the shutdown of business, loss of livelihoods and jobs.
Even if the government must borrow, it has to do so with caution. It must cut its coat according to its cloth.
But a cursory glance at the outlined projects for which the government has borrowed Sh132,314,210, 604 raises questions on whether they could not wait for the country to weather the Corona pandemic.
Some of them, including foot bridges, flyovers and sanitation, can easily be funded by our taxes without loading a debt on an already burdened citizenry.