Kenyans have started a petition to the International Monetary Fund (IMF) Executive Board over IMF approval of Kshs.255 billion loan to the Kenya government.
The country’s appetite for more loans has left many Kenyans stunned and appalled.
The petition which was started by Jefferson Murrey, detested the fact that previous loans previous loans to the Kenya government have not been prudently utilized and have often resulted in mega corruption scandals.
“Right now Kenyans are choking under the heavy burden of taxation, with the cost of basic commodities such as fuel skyrocketing, and nothing to show for the previous loans. Our President, Uhuru Kenyatta, is even on record lamenting that Sh2 billion is lost daily to corruption in Kenya,” read the petition.
The country’s external debt portfolio has risen further after the IMF approved a Sh255 billion loan for Nairobi to aide combat the Covid-19 pandemic.
The loan has been structured in two tranches with an immediate initial disbursement of Sh33.7billion while an additional Sh79billion will be released in the second tranche by June this year.
National Treasury cabinet Secretary Ukur Yattani said the monies would be used to support the next phase of the Covid-19 response and address the urgent need to reduce debt vulnerabilities.
“The balance will be disbursed following subsequent programme reviews conducted approximately every six months,” Yatani said.
The financing is under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF).
According to the 2021 Budget Policy Statement, the country’s public debt as of June 2020 stood at Sh7.06 trillion, which is equivalent to 65 percent of GDP.
In December 2020, the Treasury claimed that the figure was Sh7.2 trillion, which was 65.6per cent of GDP.
So the Treasury is simply saying it only borrowed Sh200 billion in the first half of this year, which is not true.
At the same time, in November 2020 the Treasury in its Post Covid-19 Economic Recovery Strategy stated that public debt was at Sh8.41 trillion.
This means that the Treasury has no headroom to borrow Sh1 trillion in the 2021-2022 financial year, explaining the effort to raise the debt ceiling.
In reconciling this discrepancy, the Treasury claims that this arises from committed but undisbursed concessional loans.
For example, loans from the World Bank or the IMF are always attached with conditions that the government is required to meet in order to access.
If the government is yet to meet those conditions, it is committed but undisbursed.
Further, with about Sh763 billion($6.98bn) of outstanding loans, China is by far Kenya’s largest bilateral creditor but still accounts for less than 10 per cent of the country’s current Sh8.41 trillion ($76bn) total debt.
