Kenyans go wild on social media, inconsistent with IMF loan to Kenya – Expert
Nairobi – Kenya must continue to borrow from other global lenders in order to avoid default on other loans, said Rich Management CEO Aly-Khan Satchu.
Speaking exclusively on Capital In The Morning Show with Fareed Khimani and Davina Leonard, Satchu said it was the only way the country could survive before cutting spending due to limited borrowing opportunities.
“Kenya needs to borrow to repay existing debts and pay the interest because right now in the pandemic economy, government revenues are way below its spending,” Satchu said.
“Kenya is borrowing more at the moment, but soon it will no longer be able to borrow and it will then start to reduce its spending,” he added.
More than 120,000 Kenyans have signed an online petition to reject a recent approval of 255.9 billion shillings from the International Monetary Fund to support the government’s response to COVID-19 and address the urgent need to reduce debt vulnerabilities.
The National Treasury said the facility, which falls under the IMF’s Extended Credit Facility and Extended Funding Facility, includes an initial disbursement of 79 billion shillings, which is due to be released on June 30.
The Treasury revealed that the amount, a total of 33.7 billion shillings, will be released immediately and usable for budget support.
Yatani defended the move, saying the IMF loan was part of the government’s strategy to abandon commercial lending.
According to Satchu, the loans could only be rejected if they are seen as odious debt saying the IMF is unlikely to pay attention to the online rant of Kenyans.
“People like the IMF tend not to listen to the citizens of a country or they wouldn’t make some of these loans all over the world. They like to lend to governments because they know there are millions of citizens paying taxes. Support these governments, the only way to reject these loans is to see them as heinous, ”Satchu said.
Odious debt is a type also known as illegitimate debt, which means that the national debt incurred by a dictatorial regime should not be enforceable.
Between March and November 2020, Kenya’s debt levels soared to 1.2 trillion shillings during the period.