Ndii interview on Citizen shortly

[Omollo]

No wonder the manifesto sound abstract and academic. You can see the fingerprints of this fool. The reporter is having problem squeezing a manifesto from Dr Ndoom.

why would she squeeze one from Ndii? She said she had a copy? Or it wasn't the right one?

[hk]

Ndii is a highly regarded economist and has consulted for the World Bank.   So, until proven otherwise---e.g. through basic checks---perhaps we should assume that he knows what he's talking about.

As a matter of fact, Kenya (a) is still eligible for such concessionary loans and (b) has been getting plenty of it since whenever it was declared a "middle-income economy".   Here is one example from just a couple of months ago:

If I heard him correctly he was talking about budget deficit financing. On some few projects yes kenya can qualify but not finance annual budget deficit of the tune of $7-8b. I was hoping to hear what he'd cut back to reduce borrowing from both local and international markets as he had suggested.

[RV Pundit]

And we were wondering where NASA manifesto is - I guess it still hold up in Dr NDII brain. We heard they released a policy document and the constitution implements everything. Pretty boring.

We want manifesto that is SMART - I don't have to be economist to understand what NASA wants to do - I want something I can hold them accountable 5yrs from now.

SMART criteria is pretty standard nowadays in any institution or organisation.
Specific MeasurableAssignableRealisticTime-related

why would she squeeze one from Ndii? She said she had a copy? Or it wasn't the right one?

[RV Pundit]

Obviously they haven't put much thought into this. They need to tell us by what % they want to reduce & what mix they want to have if God forbid they got power. I mean UhuRuto for all the flak have raised debt from 45% to 48-49% of GDP - just mere 3-4% - and with that have delivered SGR. Jubilee have borrowed cheaper loans from EuroBond and Chinese loans are at about the same concessionary rates as WB. Look at SGR Loan - nearly half of it's concessionary and we won't even start paying until 5-10yrs from now - when SGR will be operational.

If I heard him correctly he was talking about budget deficit financing. On some few projects yes kenya can qualify but not finance annual budget deficit of the tune of $7-8b. I was hoping to hear what he'd cut back to reduce borrowing from both local and international markets as he had suggested.

[RV Pundit]

Pray tell us what makes you think we borrow at the same rate as TZ or UG. And that is what we are talking about. We can still borrow from WB - many near developed countries borrow from WB - but not same rate low-income indebted country like Tanzania borrows.

http://www.worldbank.org/en/news/press-release/2017/04/26/world-bank-approves-300-million-to-enhance-kenyas-water-supply
[/quote]

[hk]

Ndii did so badly he'll soon be accused of sabotaging NASA to protect uthamaki

[Omollo]

Ndii did so badly he'll soon be accused of sabotaging NASA to protect uthamaki

you got into a frenzy inside your own echo chamber which you share with Pundit, peddled falsehoods and are now drawing inevitable conclusions based on the same falsehoods.

There is something huko juu I need you to confirm right away. I'll just underline it.

[Omollo]

If I heard him correctly he was talking about budget deficit financing. On some few projects yes kenya can qualify but not finance annual budget deficit of the tune of $7-8b. I was hoping to hear what he'd cut back to reduce borrowing from both local and international markets as he had suggested.

[RV Pundit]

I am told he also had a pitiful interview with KTN the day before
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=video&cd=6&cad=rja&uact=8&ved=0ahUKEwiv2pL8oO_UAhVILcAKHXarCvQQtwIIOTAF&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DKa0Xv_7RrEY&usg=AFQjCNE-_blLM1Js9a8JZdB-uB82BEXnEw

[Kim Jong-Un's Pajama Pants]

I watched the interview online.  The interviewer was clueless, impatient, angry...  I am surprised he didn't walk off during the interview.  An unbridgeable intellectual chasm was apparent from the get go.

[Nefertiti]

That's the point Windy, a typical Kenyan would have no clue of Ndii's plans due to the intellectual chasm. He must "unpack" policy into something a layman understands. Public debates at this campaign time just send a likeable chap like Madvd or Kalonzo - who can speak the language of the street.

I watched the interview online.  The interviewer was clueless, impatient, angry...  I am surprised he didn't walk off during the interview.  An unbridgeable intellectual chasm was apparent from the get go.

[Nefertiti]

I used to support Ndii actually, because he debunked the voodoo of megaprojects which NASA could not. He opened up the debate. However, his audience is strictly the middle and upper class, he does not connect with Wanjiku at all. So he can draft a beautiful whitepaper but leave it to politicians to sell it.

[MOON Ki]

If I heard him correctly he was talking about budget deficit financing. On some few projects yes kenya can qualify but not finance annual budget deficit of the tune of $7-8b. I was hoping to hear what he'd cut back to reduce borrowing from both local and international markets as he had suggested.

That seems to be a new angle.   Here is the statement I was responding to:

When he says NASA would shift from Euro type of borrowing to concessionary loans from the likes of world bank. How would he do that when Kenya can't qualify for such loans since we're now classified as emerging economy?

The normal reading of that would be that Kenya does not qualify for concessionary loans since we are now an "emerging economy".

Your modified explanation is also interesting.     So before Kenya became an "emerging economy", it could borrow "concessionary loans from the likes of world bank" for the purpose of financing "annual budget deficit of the tune of $7-8b", but now it cannot?

[MOON Ki]

Jubilee have borrowed cheaper loans from EuroBond and Chinese loans are at about the same concessionary rates as WB. Look at SGR Loan - nearly half of it's concessionary and we won't even start paying until 5-10yrs from now - when SGR will be operational.

Eurobond?    Are you kidding?    Eurobond is essentially a commerical loan.   Here is what the Treasury says on that:

5. What are the interest rates on the Sovereign Bond?

The interest rate on the five year bond is 5.875 percent and 6.875 percent for ten year tenor.

Now, please take a look at Public Debt Register, here: http://www.treasury.go.ke/publications/pdmo/category/41-external-public-debt-register.html

What you will notice is that almost all of the large number of IDA loans have an interest rate of 0.75%, with something three or four at an interest rate of 1%.

The Chinese loans shown there (at concessional rates) are all at 2%, which is at least double the rate for the World Bank loans.   The Chinese loans also have shorter repayment periods.

For the SGR:

(a) $1.6 billion is at concessional interest rates of 2%
(b) $2.0 billion is at commercial interest rates: "6-month LIBOR + 3.6%".   

-We don't now what the LIBOR will be when repayment starts, but we can get an idea from the fact  that it is around 1.4 now.    And even if we assume that LIBOR will be at an improbable 0%, the Chinese loan is still way more costly--

(c) And then there's the real killer: on the commercial part of the loan, insurance at a rate of 6.9%. Well above the interest rates.   And no grace period on that---it had to be paid upfront.   (There are no insurance premiums for World Bank etc loans.)

[hk]

If I heard him correctly he was talking about budget deficit financing. On some few projects yes kenya can qualify but not finance annual budget deficit of the tune of $7-8b. I was hoping to hear what he'd cut back to reduce borrowing from both local and international markets as he had suggested.

That seems to be a new angle.   Here is the statement I was responding to:

When he says NASA would shift from Euro type of borrowing to concessionary loans from the likes of world bank. How would he do that when Kenya can't qualify for such loans since we're now classified as emerging economy?

The normal reading of that would be that Kenya does not qualify for concessionary loans since we are now an "emerging economy".

Your modified explanation is also interesting.     So before Kenya became an "emerging economy", it could borrow "concessionary loans from the likes of world bank" for the purpose of financing "annual budget deficit of the tune of $7-8b", but now it cannot?

Before rebasing Kenya budget was below $10b now its $20b Kra collecting about $14b . When budget was smaller we could borrow from world bank and plug our deficit with minimum borrowing in the debt market. World bank concessionary loans total about $20b to be divided among 100plus countries. Kenya by itself needs $7b or so, so I wonder how Ndii can argue that we can plug our budget by getting concessionary loans from world bank and IMF. If he were to argue about slashing the budget that's would be one thing.  But as far as I understand the manifesto they'd even spend more.

[MOON Ki]

Before rebasing Kenya budget was below $10b now its $20b Kra collecting about $14b . When budget was smaller we could borrow from world bank and plug our deficit with minimum borrowing in the debt market. World bank concessionary loans total about $20b to be divided among 100plus countries. Kenya by itself needs $7b or so, so I wonder how Ndii can argue that we can plug our budget by getting concessionary loans from world bank and IMF. If he were to argue about slashing the budget that's would be one thing.  But as far as I understand the manifesto they'd even spend more.

All that might be so.   But my real comment was on this claim:

Kenya can't qualify for such loans since we're now classified as emerging economy. 

That---the basis on which Ndii was getting a beating---is a statement to the effect that our new "emerging economy" status makes us ineligible ("can't qualify") for such loans.   What you are now saying is that we can't get that amount simply because the World Bank doesn't have enough money to lend for such purposes.    That seems to be an entirely different statement.

As to what Ndii might have been talking about, I note that your previous statement starts with this qualifier:

If I heard him correctly ...

[hk]

Before rebasing Kenya budget was below $10b now its $20b Kra collecting about $14b . When budget was smaller we could borrow from world bank and plug our deficit with minimum borrowing in the debt market. World bank concessionary loans total about $20b to be divided among 100plus countries. Kenya by itself needs $7b or so, so I wonder how Ndii can argue that we can plug our budget by getting concessionary loans from world bank and IMF. If he were to argue about slashing the budget that's would be one thing.  But as far as I understand the manifesto they'd even spend more.

All that might be so.   But my real comment was on this claim:

Kenya can't qualify for such loans since we're now classified as emerging economy. 

That---the basis on which Ndii was getting a beating---is a statement to the effect that our new "emerging economy" status makes us ineligible ("can't qualify") for such loans.   What you are now saying is that we can't get that amount simply because the World Bank doesn't have enough money to lend for such purposes.    That seems to be an entirely different statement.

As to what Ndii might have been talking about, I note that your previous statement starts with this qualifier:

If I heard him correctly ...

yes we qualify for concession loans. But the amount we qualify for can't plug our deficit to shift from borrowing from local and international debt markets.

[MOON Ki]

yes we qualify for concession loans. But the amount we qualify for can't plug our deficit to shift from borrowing from local and international debt markets.

I'm glad we've taken care of that part, and Ndii is now to be beaten up on quite different grounds.   So, then.   To the new stuff:

Would  Ndii know how much IDA money exists out there and how many countries are able to partake?   (By the way the number of countries is 77, not "100 plus" you mentioned.)  Would he believe, and did he suggest, that Kenya's annual budget deficit (which you state is $7 billion to $8 billion) can be plugged through concessional loans?

I listened to the relevant of the interview, and my understanding is that he was talking about a reduction in commercial (and especially local)  borrowing.   Can such borrowing be reduced by instead taking concessional loans?    I believe so.

Earlier you also  had this:

If he were to argue about slashing the budget that's would be one thing.

At one point he does state that the government should "reduce its appetite for money".    I interpreted that to mean a reduction in government expenditure, and, therefore, the budget ... (relative to revenue).   How did you interpret it?

An aside: The interviewer-lady has problems that go far beyond a lack of understanding of even the most basic aspects of economics or the inability to follow a straightforward line of reasoning. It appears that she does not even understand basic, common phrases in colloquial English, contrary to what one would expect of an interviewer for this type of show.

For example:   

At one point Ndii says that the government should "stop digging the [debt] hole".    The interview-lady asks if that means "cancelling existing debt agreements"!!!!! Ndii then has to spend some time explaining that, no, existing debts must be paid, but ....  And so on, and so forth.  Where on earth did they find this "blonde" lady?

[RV Pundit]

Ohoo so someone think treasury is by-passing some concessional loan from IMF/WB for expensive loan.Why would it do that. I mean apart from conditionalities & slow pace of the so called concessional loan - kenya clearly is mature enough to tap into the international debt market and eurobond was watershed moment for us.We don't yet have debt problem..at 50% debt/GDP...we can still borrow more.

[MOON Ki]

Ohoo so someone think treasury is by-passing some concessional loan from IMF/WB for expensive loan.Why would it do that.

That's actually not very difficult to understand.   Kenya is a nation of eaters. Here is something that you wrote on another thread:

WSR/Uhuru simply replaced Wanjigis and are getting 5-10% from Chinese contractors.

http://www.nipate.org/index.php?topic=4613.0

For the eaters, WB and IMF, who tend to ask about where the money actually goes, are "bad for business".  But local commercial borrowing, Eurobond, Kung Fu loans .... those are serious gravy trains.