NAIROBI, Kenya, Apr 6- Kenya must continue to borrow from other global lenders in order to avoid defaulting other loans, the Chief Executive Officer at Rich Management Aly-Khan Satchu said.
Speaking exclusively on the Capital In The Morning Show with Fareed Khimani and Davina Leonard, Satchu said this is the only way the country will survive before it cuts on its expenditure due to limited borrowing opportunities.
“Kenya has to borrow in order to pay back existing debts and pay interest because at the moment in the pandemic economy the government’s income is falling far short of its expenditure,” said Satchu.
“Kenya is borrowing more for now but soon it will not be able to borrow anymore and then it will start cutting expenditure,” he added.
More than 120,000 Kenyans have signed an online petition to reject a recent approval of Sh255.9 billion from the International Monetary Fund to support the government’s COVID-19 response and address the urgent need to reduce debt vulnerabilities.
The National Treasury said the facility, which is under the IMF’s Extended Credit Facility and Extended Fund Facility, includes an initial disbursement of Sh79 billion, due for release by June 30.
Treasury revealed that the amount, a total of Sh33.7 billion will be released immediately and is usable for budget support.
Yatani defended the move saying that the IMF’s loan is part of the government’s strategy to abandon commercial loans.
According to Satchu, the loans could only be rejected if they are considered an odious debt saying that IMF is likely to not pay attention to Kenyans online rant.
“The likes of the IMF tend not to listen to the citizens of a country otherwise they wouldn’t be making some of these loans all over the world. They like to lend to governments because they know there are millions of tax-paying citizens who stand behind those governments, the only way these loans can be rejected is if they can be considered odious,” said Satchu.
An odious debt is a type that is 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 escalated to Sh1.2 trillion during the period.