Hope this won't last otherwise expect companies and individual to go bankrupt!

[RV Pundit]

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[Kadudu]

Poor companies which have to make dividends over 30% to pay for the interest.
I thought you said Jubilee has made wonders in Kenya economically?

http://www.businessdailyafrica.com/Corporate-News/Anguish-as-Kenya-banks-raise-interest-rates/-/539550/2928400/-/k7j3myz/-/index.html

[RV Pundit]

Economy has been doing well (not according to me but according to credible institutions), weathering all storms (tourism,tea,insecurity), and this is really strange. The USD is an exogenous risk we cannot do anything much about it. But why KRA is failing to collect enough taxes forcing treasury to borrow at those rates is really dumbfounding. Let hope failure to collect taxes is due to normal quarterly arrangment.

But normally you get such shocks here and there....we had it in Nara and Kibadinga regimes...dollar rising to 107!

Well the refusal of Dr Njoroge to allow gov to overdraw (aka print money) like would normally happen; mean Rotich has no option except to rank to bankers for an overdraft.

Poor companies which have to make dividends over 30% to pay for the interest.
I thought you said Jubilee has made wonders in Kenya economically?

[Omollo]

Uhuru has shown that he is a swellhead and will not climb down in the face of superior forces. Moi ate humble pie and made the changes needed to get the country moving.

I can't see them getting out of this for at least 5 years and only with serious austerity and tough measures against wastage and corruption. There is an election coming and they need money. When yoiu see Opus Dei go, know that the printing presses have been oiled and ready to run.

MoonKI have you read Achebe's A Man of the People? If not you better read it urgently.  There are traces of Chirundu (Es'kia Mphahlele) in the whole Uhuru personality.  In both cases, you have Chief Nanga's hubris matching Chirundu's own extreme arrogance.
Both have an unsavoury end.

Poor companies which have to make dividends over 30% to pay for the interest.
I thought you said Jubilee has made wonders in Kenya economically?

http://www.businessdailyafrica.com/Corporate-News/Anguish-as-Kenya-banks-raise-interest-rates/-/539550/2928400/-/k7j3myz/-/index.html

[Omollo]

In respect of the periods you refer to perhaps you can do a comparison. Was there runaway spending and unbridled corruption in tow? Yes, may be there was some quantitative easing by the CBK but by and large Kibaki reigned in spending. He personally cut down on foreign visits and imposed visible austerity.

While not much was done about corruption, it was reduced by virtue of reduced opportunities. The new constitution and institutions also seemed to instill some fear - albeit short lived.

Uhuru has basically succumbed to pressure from the thieves surrounding him to use his powers to revenge on these institutions for daring to slow down the bandits. To me the lowest point came when he allowed himself to blow up an empty ship in the high seas so that the drugs could be salvaged. I stopped giving him benefit of doubt.

I do not know of any economic crisis of this magnitude that ends in less than 3 years. And then only after tough austerity measures. You are being too optimistic in thinking revenue collection would do the trick.

Economy has been doing well (not according to me but according to credible institutions), weathering all storms (tourism,tea,insecurity), and this is really strange. The USD is an exogenous risk we cannot do anything much about it. But why KRA is failing to collect enough taxes forcing treasury to borrow at those rates is really dumbfounding. Let hope failure to collect taxes is due to normal quarterly arrangment.

But normally you get such shocks here and there....we had it in Nara and Kibadinga regimes...dollar rising to 107!

Well the refusal of Dr Njoroge to allow gov to overdraw (aka print money) like would normally happen; mean Rotich has no option except to rank to bankers for an overdraft.

Poor companies which have to make dividends over 30% to pay for the interest.
I thought you said Jubilee has made wonders in Kenya economically?

[RV Pundit]

I can try find out what it was like when USD was at 107 during Kibadinga grand collision.

Anyway I there are two parts to the equation; Revenues and Payments. All these are captured by projected budget estimates.

In kenya...revenues...are mostly from taxes (maybe 60%)+debt(30%)+Grants &Aid(10%).The payment..are about the same..salaries+admin(30%);debt(30%)+development!

Corruption cannot exceed projected spending. You can steal all the money meant for the road...but at end of the day...the gov won't be broke...there just won't be a road..and in the long term (how many years)...this will affect the general economy. The other part of corruption would be those ango leasing like scam where we commit to more debts...mean debt repayment increment every year.Overspending...should not arise...are working within the budget..and that is job of Adhiambo to ensure budget lines are kept.

Anyway unless there are serious issues at KRA and Dr Njoroge does unearth some serious mess in CBK...I see this as temporary shock. USD will soon come to around 90.

In respect of the periods you refer to perhaps you can do a comparison. Was there runaway spending and unbridled corruption in tow? Yes, may be there was some quantitative easing by the CBK but by and large Kibaki reigned in spending. He personally cut down on foreign visits and imposed visible austerity.

While not much was done about corruption, it was reduced by virtue of reduced opportunities. The new constitution and institutions also seemed to instill some fear - albeit short lived.

Uhuru has basically succumbed to pressure from the thieves surrounding him to use his powers to revenge on these institutions for daring to slow down the bandits. To me the lowest point came when he allowed himself to blow up an empty ship in the high seas so that the drugs could be salvaged. I stopped giving him benefit of doubt.

I do not know of any economic crisis of this magnitude that ends in less than 3 years. And then only after tough austerity measures. You are being too optimistic in thinking revenue collection would do the trick.

[Omollo]

On corruption: You are only partially correct IMHO. Take the Waiguru-Harakhe Heist. Nearly a billion was siphoned out of the public funds using trickery. Another 800 Million was on its way out before Opus Dei put a stop to it. Ask yourself how many such heists have taken place in the short time Uhuru has been president?

For KRA to be blamed or form the solution, we need to know if there has been any shortfall in their collection so far.This end of October so we are seeing the second quarter coming to and end (assuming the cycle remains from June as has been the case). Is there a deviation from the norm? Has KRA collected less than it would in this period. I seriously doubt that.

If not the revenue, then the finger naturally points at spending. Has the regular GoK spending increased beyond the norm?

If the answer to these two questions is negative, it would mean there is something unusual.

In any case what is GoK doing about the various slush funds as in the NIS, Interior Ministry, Defense (opaque spending), State House etc.

Surely KRA revenue collection can't go down so drastically without cause.

I can try find out what it was like when USD was at 107 during Kibadinga grand collision.

Anyway I there are two parts to the equation; Revenues and Payments. All these are captured by projected budget estimates.

In kenya...revenues...are mostly from taxes (maybe 60%)+debt(30%)+Grants &Aid(10%).The payment..are about the same..salaries+admin(30%);debt(30%)+development!

Corruption cannot exceed projected spending. You can steal all the money meant for the road...but at end of the day...the gov won't be broke...there just won't be a road..and in the long term (how many years)...this will affect the general economy. The other part of corruption would be those ango leasing like scam where we commit to more debts...mean debt repayment increment every year.Overspending...should not arise...are working within the budget..and that is job of Adhiambo to ensure budget lines are kept.

Anyway unless there are serious issues at KRA and Dr Njoroge does unearth some serious mess in CBK...I see this as temporary shock. USD will soon come to around 90.

[RV Pundit]

I think kenya fundamentals are strong. What is increasingly becoming risky is the amount of money that has to be PAID...MUST BE PAID...these are monies that have to be withdrawn from Consolidated Fund...salaries, pensions, county allocation, cdf and debt repayment..the share of that kind of money compared to discretionary spending (development money which can be delayed or postponed) is becoming a serious concern.

Add all the capitation money to schools, hospitals, social programs...and you have a real straighjacket.

Treasury every month now has to make more than 150-200B. About 40B to service debt. About 70B to pay salaries.About 20B to every county. About 20B to pay pensioners.Capitation to every Kid in public primary and secondary schools. This money cannot be delayed.

While revenues will fluctuate...KRA may collect less this month...treasury may fear going to debt market because of interest rate or dollar exchange rate...to bridge these gaps...and last option is to order CBK to print money from air [which Dr Njoroge has put a stop to]...and cause inflation.

On corruption: You are only partially correct IMHO. Take the Waiguru-Harakhe Heist. Nearly a billion was siphoned out of the public funds using trickery. Another 800 Million was on its way out before Opus Dei put a stop to it. Ask yourself how many such heists have taken place in the short time Uhuru has been president?

For KRA to be blamed or form the solution, we need to know if there has been any shortfall in their collection so far.This end of October so we are seeing the second quarter coming to and end (assuming the cycle remains from June as has been the case). Is there a deviation from the norm? Has KRA collected less than it would in this period. I seriously doubt that.

If not the revenue, then the finger naturally points at spending. Has the regular GoK spending increased beyond the norm?

If the answer to these two questions is negative, it would mean there is something unusual.

In any case what is GoK doing about the various slush funds as in the NIS, Interior Ministry, Defense (opaque spending), State House etc.

Surely KRA revenue collection can't go down so drastically without cause.

I can try find out what it was like when USD was at 107 during Kibadinga grand collision.

Anyway I there are two parts to the equation; Revenues and Payments. All these are captured by projected budget estimates.

In kenya...revenues...are mostly from taxes (maybe 60%)+debt(30%)+Grants &Aid(10%).The payment..are about the same..salaries+admin(30%);debt(30%)+development!

Corruption cannot exceed projected spending. You can steal all the money meant for the road...but at end of the day...the gov won't be broke...there just won't be a road..and in the long term (how many years)...this will affect the general economy. The other part of corruption would be those ango leasing like scam where we commit to more debts...mean debt repayment increment every year.Overspending...should not arise...are working within the budget..and that is job of Adhiambo to ensure budget lines are kept.

Anyway unless there are serious issues at KRA and Dr Njoroge does unearth some serious mess in CBK...I see this as temporary shock. USD will soon come to around 90.

[gout]

funny logic by IMF and Ngugi guy at CBK.... why not print ...why allow banks to 'create money' (Zeitgest) and sell it at 120%...is it a matter of who gets biggest dividend from these banks?? which is cheaper and rational??

[RV Pundit]

Yes some money printing can go along way to cushion the economy esp against exogenous short term risk such as global strengthening of the dollar.  We can live with inflation...but not with 30% interest rate hike.

CBK should not listen to every IMF dictate. US has printed itself out of a bigger crisis. Greece are stuck because they gave up their central banking to Brusells.

funny logic by IMF and Ngugi guy at CBK.... why not print ...why allow banks to 'create money' (Zeitgest) and sell it at 120%...is it a matter of who gets biggest dividend from these banks?? which is cheaper and rational??

[MOON Ki]

MoonKI have you read Achebe's A Man of the People? If not you better read it urgently. 

Ages ago, in secondary school.   Another classic I should revisit.

[Omollo]

Some of these books are everlasting. Because of my occupation I have to keep a copy of Gullivers' Travels with me all the time. I see all those characters come to life daily.

MoonKI have you read Achebe's A Man of the People? If not you better read it urgently. 

Ages ago, in secondary school.   Another classic I should revisit.

[Georgesoros]

Everyone is going to suffer as USA raises its interest rates. Companies will close while others will cut back. Be prepared.

[Georgesoros]

Most mortgages in Kenya are a cash business.