Gok should just default on loans

[KenyanPlato]

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Great debate or insights here

... because we are killing the economy to avoid default.

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

— Nderi, J (@nderi_j) December 27, 2023

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[sema]

What are the ramifications of default? Ndii is totally against it. 

The shilling keeps getting killed/destroyed by the dollar, but Ndii seems to think they can fix things in about 5 years by restructuring the debt payments not by defaulting.

[Nowayhaha]

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 .

[KenyanPlato]

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 .

That has not happened to Zambia, ghana or Ethiopia. They will negotiate debt forgiveness and start all over

[Nefertiti]

Credit rating will go to the dogs. Ruto keeps whining about the high cost of capital for Sub Sahara, yet it all comes down to credit rating. At B level it's already big interest. You default it becomes B-

[hk]

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".

[KenyanPlato]

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

[hk]

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.

[patel]

The sooner the better so people can adjust accordingly. No way out of default. June is not too far.
Default on Eurobond.