?s=20... because we are killing the economy to avoid default.
— Nderi, J (@nderi_j) December 27, 2023
Why is the credit of the govt more important than the economy?
Do we live for the govt or does the govt live for us? https://t.co/aA9x9CddRe
Default means no more money will be availed for borrowing , all investors will take their money out of Kenyan economy . All Kenyan assets abroad and sovereign bond will be declared null and void . The shilling will tumble and life will be unbearable , worse than Zimbabwe .
Foreign debt or local debt? Foreign debt default ramification wouldn't be as dire as local debt. Local debt is held by banks, pension funds, insurance , invest funds, individuals and also foreigners. Defaulting means forced exchange of old debt with new paper with different rates and tenor. This would affect banks liquidity and some banks & funds could have a " run on banks and funds redemption".Foreign debt
It would most likely mean a battered shilling which would create hyper inflation given our trade deficit. CBK chose to defend the shilling by raising interest rates. Treasury decided to maintain huge budgets and accompanying budget deficits. High interest rates and high tax rates is what stifling the economy(killing the economy to avoid default). Preferably treasury should have cut spending and privatized the "family jewels" safaricom, kcb etc to raise quick funds to avoid default instead of raising rates and borrowing from IMF.Foreign debt or local debt? Foreign debt default ramification wouldn't be as dire as local debt. Local debt is held by banks, pension funds, insurance , invest funds, individuals and also foreigners. Defaulting means forced exchange of old debt with new paper with different rates and tenor. This would affect banks liquidity and some banks & funds could have a " run on banks and funds redemption".Foreign debt