kenya debt at dangerous levels - 60% debt to gdp with repayment at 40% of taxes

[Georgesoros]

Anyone here read the Eurobond 2 prospectus?

[pdf]http://www.ise.ie/debt_documents/Final%20Prospectus%2026.02_7af525f0-c8ad-4270-977f-56a7e5a1cd42.PDF[/pdf]

Thanks for posting the prospectus. Looking at use of proceeds and distribution plan its clear this bond is for paying syndicate loans. The risk, especially budget deficit is one of key risks highlighted. On the positive note, by accessing global debt markets kenya will be forced to make the necessary reforms needed. Already IMF is leading the way to ensure market reforms are implemented.

Reforms, reforms, reforms. IMF should leave the country deal with its on problems, furthermore Kenyans are the ones left paying for these huge loans. (shs4.8 trillion in four years). IMF can recommend, but hyenas also have their own agenda. They counter these reforms and five to ten years later its back to the same point. Example, look at institutional reforms started ten years ago and how Jubilee has dismantled them leaving Kenyans worse off than under Moi. Sad thing is some Kenyans support the dismantling of these reforms because its their man in office.

[hk]

Reforms, reforms, reforms. IMF should leave the country deal with its on problems, furthermore Kenyans are the ones left paying for these huge loans. (shs4.8 trillion in four years). IMF can recommend, but hyenas also have their own agenda. They counter these reforms and five to ten years later its back to the same point. Example, look at institutional reforms started ten years ago and how Jubilee has dismantled them leaving Kenyans worse off than under Moi. Sad thing is some Kenyans support the dismantling of these reforms because its their man in office.

Kenya public debt hasn't increased  by $48b in four years https://www.centralbank.go.ke/public-debt/ its more like $25b or try debt by GDP www.bloomberg.com/amp/news/articles/2017-07-18/the-charts-that-show-kenya-s-economy-after-four-years-of-jubilee. And what are the institution reforms that been dismantled?

[Georgesoros]

Reforms, reforms, reforms. IMF should leave the country deal with its on problems, furthermore Kenyans are the ones left paying for these huge loans. (shs4.8 trillion in four years). IMF can recommend, but hyenas also have their own agenda. They counter these reforms and five to ten years later its back to the same point. Example, look at institutional reforms started ten years ago and how Jubilee has dismantled them leaving Kenyans worse off than under Moi. Sad thing is some Kenyans support the dismantling of these reforms because its their man in office.

Kenya public debt hasn't increased  by $48b in four years https://www.centralbank.go.ke/public-debt/ its more like $25b or try debt by GDP www.bloomberg.com/amp/news/articles/2017-07-18/the-charts-that-show-kenya-s-economy-after-four-years-of-jubilee. And what are the institution reforms that been dismantled?

Parliament is supposed to be independent but it looks more like the executive.
Since Kibaki, no serious debate has really taken place in Parliament about devolution and how to make it work.
Auditor General was told to shut up or lose his job, so he gets paid to do nothing.
There is supposed to be debate about bgovt. debt, but the treasury just does whatever.
Judiciary is slowly being dismantled to fit the executive.
Law enforcement is for those who oppose govt.
 Meanwhile no case has been actively pursued for those who steal from taxpayers. Taxpayers are told - money was refunded.
Total borrowed in four years will be Shs 5.8 trillion by end of 2018.
Read the last paragraph

https://www.standardmedia.co.ke/business/article/2001270355/fear-as-kenya-s-borrowing-hurtles-towards-greece-like-debt-crisis

[hk]

Parliament is supposed to be independent but it looks more like the executive.
Since Kibaki, no serious debate has really taken place in Parliament about devolution and how to make it work.
Auditor General was told to shut up or lose his job, so he gets paid to do nothing.
There is supposed to be debate about bgovt. debt, but the treasury just does whatever.
Judiciary is slowly being dismantled to fit the executive.
Law enforcement is for those who oppose govt.
 Meanwhile no case has been actively pursued for those who steal from taxpayers. Taxpayers are told - money was refunded.
Total borrowed in four years will be Shs 5.8 trillion by end of 2018.
Read the last paragraph

https://www.standardmedia.co.ke/business/article/2001270355/fear-as-kenya-s-borrowing-hurtles-towards-greece-like-debt-crisis

[Georgesoros]

Parliament is supposed to be independent but it looks more like the executive.
Since Kibaki, no serious debate has really taken place in Parliament about devolution and how to make it work.
Auditor General was told to shut up or lose his job, so he gets paid to do nothing.
There is supposed to be debate about bgovt. debt, but the treasury just does whatever.
Judiciary is slowly being dismantled to fit the executive.
Law enforcement is for those who oppose govt.
 Meanwhile no case has been actively pursued for those who steal from taxpayers. Taxpayers are told - money was refunded.
Total borrowed in four years will be Shs 5.8 trillion by end of 2018.
Read the last paragraph

https://www.standardmedia.co.ke/business/article/2001270355/fear-as-kenya-s-borrowing-hurtles-towards-greece-like-debt-crisis

A debt is a debt, whether i roll it over or not. The former was supposed to be paid anyway.
Well, I agree we will pay for these mistakes. On less govt, I agree too. Theres TOO much govt. consuming too much money. Of course it wont be cut under Jubilee...

[RV Pundit]

Nyoro makes a powerful argument here. cost of interest from borrowing is less than inflation; if we don't build a road now because we don't want to borrow; 5 years from now that road would be required maybe 5 times the amount of money; if we borrowed today; the interest would be really miniscule and we would have a road.
https://www.nation.co.ke/oped/opinion/Kenya-should-borrow-more-to-fund-projects/440808-4328302-lylossz/index.html

The JKIA-Rironi highway, which will pass through James Gichuru Road, was to be built in 2012 at a cost of Sh25 billion.

That rose to Sh38 billion in 2016. It is now being built at Sh59 billion.

Suppose we borrowed the Sh25 billion in 2012 and built the road immediately. Even if we had borrowed from a Shylock, it would saved the country a lot of money.

[hk]

A debt is a debt, whether i roll it over or not. The former was supposed to be paid anyway.
Well, I agree we will pay for these mistakes. On less govt, I agree too. Theres TOO much govt. consuming too much money. Of course it wont be cut under Jubilee...

What matters is outstanding debt, rolling over means the principal is paid by new loan and only interest is being paid( Most mshwari and mobile loans users have mustered the art of rolling over debt ).  Because the Euro loans are dollar dominated it means the government has to get insurance policy in form of IMF standby loan to safeguard shilling incase of any external shock. This is where government is being forced to reduce deficit and as result it has resulted in raising taxes on fuel(16% vat) as condition to get the loan.

[Georgesoros]

Nyoro makes a powerful argument here. cost of interest from borrowing is less than inflation; if we don't build a road now because we don't want to borrow; 5 years from now that road would be required maybe 5 times the amount of money; if we borrowed today; the interest would be really miniscule and we would have a road.
https://www.nation.co.ke/oped/opinion/Kenya-should-borrow-more-to-fund-projects/440808-4328302-lylossz/index.html

The JKIA-Rironi highway, which will pass through James Gichuru Road, was to be built in 2012 at a cost of Sh25 billion.

That rose to Sh38 billion in 2016. It is now being built at Sh59 billion.

Suppose we borrowed the Sh25 billion in 2012 and built the road immediately. Even if we had borrowed from a Shylock, it would saved the country a lot of money.

Am all for KSM-NKR-NRB- MSA-NRB dual. Even if they borrow.
But, Why should the cost double?
Labor costs have not doubled. Materials haven't doubled. The only thing that has doubled is bribery and speculation.
Acquiring land should be done by eminent domain, not market value. If they used that you'll see how fast people will stop buying property along proposed expansions. Costs will come down etc.

[RV Pundit]

Well - but that is the reality - you don't build now -  5yrs later - it will cost you more than double to do it - so it better to do it now - and repay interest. If we had borrow 25B - the interest would not have be more than 1B. Now we have to pay 30B more.

Am all for KSM-NKR-NRB- MSA-NRB dual. Even if they borrow.
But, Why should the cost double?
Labor costs have not doubled. Materials haven't doubled. The only thing that has doubled is bribery and speculation.
Acquiring land should be done by eminent domain, not market value. If they used that you'll see how fast people will stop buying property along proposed expansions. Costs will come down etc.

[hk]

Kenya agreed to cut budget deficit https://www.bloomberg.com/news/articles/2018-03-08/kenya-requests-six-month-extension-of-standby-facility-imf-says  to get a standby loan to act as buffer for kenya shilling since all our external debts are dollar dominated. Its either the government cut spending, raise taxes(petrol vat to be applied in setpember), or unload government holding in various companies.

[Georgesoros]

Anyone here read the Eurobond 2 prospectus?

[pdf]http://www.ise.ie/debt_documents/Final%20Prospectus%2026.02_7af525f0-c8ad-4270-977f-56a7e5a1cd42.PDF[/pdf]

Thanks for posting the prospectus. Looking at use of proceeds and distribution plan its clear this bond is for paying syndicate loans. The risk, especially budget deficit is one of key risks highlighted. On the positive note, by accessing global debt markets kenya will be forced to make the necessary reforms needed. Already IMF is leading the way to ensure market reforms are implemented.

The problem we have is lack of discipline in money matters. There are systems in place to  catch the Waigurus, but lack or willingness to enforce the law impedes progress. Deficits will continue to grow as long as the Waiguru protection Act is in place.