But Jubilee gave us infrastructure that will outlast 10 generations. Now tell us what Jubilee 2.0 has done with borrowing. It better to borrow and invest in hardware. Than to borrow for budgetary support.
I prefer Jubilee 1.0 borrowing SGR - 5B.Than Eurobond 3B - another 2B - and then IMF_WB - 3B - that goes into Budget Support.
We need to ring-fenced borrowed money to brick-mortar project - at least when future generations - are repaying - they can see it.
If you borrow money as individual - and buy a plot - become broke but RICH - that is OKAY. If you borrow the same money - to invest in a business that is not well thought out or to buy Mandazi with - that is terrible - because you'll become broke and poor.
Again Jubilee 2.0 if Ruto was on the driving seat WOULD NEVER HAVE STOPPED PUBLIC INVESTMENT. Yes borrowing can stop - but public investment must continue. You stop public investment - GDP tanks as now one engine - private investement is running - and other is dead - your GDP to debt worsen - everything goes BAD. You cannot stop that reggae of development...without serious consequences.
. It was the time to now sell these 127 loss making entities and use the money to invest in HARDWARE. It was also time to do SERIOUS PPP - like we did with Energy sector and are now doing with TOLL ROADS.
If GOV IN DEVELOPING WORLD is not investing in hardware - what exactly is it business. To just spin the wheels, pay recurrent expenditure and pay salaries?????????????????? That luxury is only available to DEVELOPED FIRST WORLD countries.
Gov in developing world has and must build infrastructure - it MUST DEVELOP the country - or go home.
And it can do that by 1) raising taxes - very hard considering most people are already too poor and informal
And 2) it can borrow - whenever possible from China/IMF/WB - concessional low interest long maturity loans - and avoid commercial loans - and borrow loans tied to projects. CHINESE loans are the best. They are low interest long maturing and tied to infrastructure delivered by Chinese - they have LIFTED AFRICA in a generation.
And 3) Sell some of it's non strategic assets to fund infrastructure. I am talking KPL, Safaricom, National Oil and many others which can get gov 10B dollars - and are of no strategic value - if gov was not a shareholder. KIBAKI DID THIS - and NOBODY talks about it.
And 4) - PPP - Private Sector Public Partnership - Road tools, Road Annuity, Energy PPAs - just make sure you get a good deal - by negotiating smartly while also encouraging investors to invest in public projects. About 10B dollars has been injected into electricity sector from private sector..Turkana Wind is nearly 1B dollars. Road annuity - Ruto got it off ground...it need to be oiled...banks should led money to private contractors..and gov should repay over a long period. Toll roads..god sent..Chinese using their own 0.7B dollars on Mombasa road. How many people in Nairobi would pay extra money to avoid traffic jams...millions..that is money investors can get..by providing roads..in gov land. The same with housing...that Uhuru doesn't quite get or has no balls to get it off ground. The pent up demand in Nairobi for housing is staggering....and Chinese can deliver houses for 1M Kshs.
And this is where a leader like Ruto comes IN.
But if you stop development and then proceed to live within your poverty means
- that is INSANITY.
Jubilee 1.0 is responsible for the debt mess. Budget deficits of more than 4% is irresponsible, Kenya's 6%-8% its just plain insane. Kenya current problem now is debt and expenditure. While privatizing parastatals is good the depth of kenya's problem wont be solved by privatization only. Kenya budget doubled the first year of jubilee 1.0 fueled by local and external debt https://www.centralbank.go.ke/public-debt/. By jubilee 2.0 the headroom to borrow was limited so the pace slowed. The idea that there's free money out there to nail down "hardware' i.e infrastructure is just economic and financial insanity.
Topic: IMF back in town - with usual painful reforms (Read 4593 times)