• In the last year President Ruto has made 48 foreign trips costing Sh360 million
• The $2 billion Eurobond has to be repaid in June 2024
President Ruto has been criticised for profligate foreign travel but this was necessary to demonstrate that Kenya is not a basket case.
As a result, Kenya has secured loans from the IMF, World Bank and China which lift the threat of default on $2 billion Eurobond falling due in June 2024.
If Kenya defaulted, it would be a disaster. Manufacturing would grind to a halt, there would be fuel shortages and the exchange rate would collapse.
In the last year, the national debt has jumped from Sh8.6 trillion to Sh10.6 trillion, largely because of the declining exchange rate. Most of the recent borrowing has been to stave off the threat of default.
The exchange rate is likely to improve because the Central Bank has raised the minimum lending rate and the threat of default on the Eurobond has receded.
Austerity and tax rises are still necessary to reduce the Budget deficit but it would be a mistake for the President to stop his foreign trips in the misguided pursuit of savings (although he should control the numbers in his entourage). He is a salesman for Kenya and his trips bring in more than they cost.
Quote of the day: "Human beings are perhaps never more frightening than when they are convinced beyond doubt that they are right."
Laurens van der Post
The South African writer was born on December 13, 1906