- A human rights organisation now wants international lenders to suspend any further lending of loans to the debt-stuck Kenyan government.
- The International Center for Policy and Conflict wants the International Monetary Fund, the World Bank and other lenders to cease their support until the current debt stock is audited.
Image: KARUGA WA NJUGUNA
A human rights organisation now wants international lenders to suspend any further granting of loans to the debt-stuck Kenyan government.
The International Center for Policy and Conflict asked the International Monetary Fund, the World Bank and other lenders to cease their support until the current debt stock is audited.
“All lenders, both domestic and foreign, must stop forthwith lending any loans to the Kenya government until the independent forensic audit is completed,” ICPC Executive Director Ndungu Wainaina said.
In a statement on Friday, Wainaina asked the creditors to initiate a comprehensive independent audit of the country’s domestic, foreign, concessional and commercial debts.
“While independent debt audit is proceeding, development partners supporting specific essential service sectors can continue with support to those sectors,” he said.
The audit should also include the total amount of state guarantees to all government-owned enterprises and agencies to track exactly what has happened with the loan money.
“For independent forensic audit transparency, it will be important for the process of identifying the audit agency to be made public,” he said.
In addition, Wainaina said the country’s 2024-25 budget be completely overhauled and a new one prepared in strict adherence to the Constitution and budget laws.
The country is debt-choked and cannot withstand any more loans.
Kenya’s debt stock currently stands at Sh11.2 trillion or 67 per cent of the country’s Gross Domestic Product from 46 per cent in 2010.
“The debt service payments are equivalent to 63 per cent of ordinary revenue and interest repayment has risen to 30.1 per cent of ordinary revenue,” he said.
He wants the government to consider entering into part of the bonds and loans debt restructuring negotiations for a minimum period of five years.
“It is no longer tenable to rely only on fiscal adjustments with supplementing funding from IMF and World Bank,” he said.
Citizens cannot see or attribute direct improvement to their living standards with this humongous debt.
“Kenya is facing significant debt distress which is sinking the economy. Debt is causing unacceptable economic and financial throbbing to Kenyans. The country is possibly heading to default if already it is not there,” he said.
Citing reports by the Parliamentary Budget Office, Wainaina reckoned that the economy is in real danger of a liquidity crisis.
This, he added, is demonstrated by the inability of the government to meet its essential development and services obligations.
“The country’s economic crisis is consequent of fiscal profligacy financed by borrowed and stolen unexplained and illegal debt,” he said.
Crucial debt sustainability indicators including debt service to revenue ratio and debt to GDP ratio are deeply troubling.
The revenue collections, he added, are falling despite high taxes and the debt repayments surging perilously.
“The unpredictable fluctuating exchange rates, adverse fiscal conditions and natural disasters are only making matters riskier by the day,” Wainaina said.