While Kenyans are yet stuck in divisive politics and the rot in corruption taking lead in every media house , Kenyans will one day wake up and discover their sold.
In recent years the government has relied on a strategy of borrowing from Peter to pay Paul, which is basically borrowing at expensive interest rates to settle maturing debts and avoid a calamitous possibility of default.
The severity of this strategy came to the fore early this year when Treasury settled a $750 million syndicated loan .
The year 2019 will even be more tricky when Treasury will settle a $750 million five-year tranche of the Eurobond that has accrued $63 million in interest and fees that the country was issued in 2014 . PTA’s January $250 million syndicated loan will also mature in 2019 which will require huge payouts.And by 2020, the $800 million three year loan from a syndicate of Citi, Standard Chartered and Standard Bank SA will be due for repayment.
IMF’s Managing Director Christine Lagarde, thinks Africa’s debt problems ‘could very well’ worsen in 2018 as the dollar appreciates and the US raises interest rates, according to an interview with Quartz magazine. She said the bond investors who were busy chasing high yield ‘were so eager to lend that I don’t think they were very serious about assessing the risks’.
China as brutal as commercial lenders has not been too kind to defaulters. This month, the Asian giant seized strategically located Hambantota port from Sri Lanka. Last year it seized the Mediterranean port of Piraeus, which a Chinese firm acquired for $436 million from a cash-strapped Greece.
This should ring bells for Kenya whose Chinese loans have doubled from Sh227 billion ($2.2 billion) in 2014 to Sh414 billion ($4 billion) by 2017. To service this, Kenya will wire Sh150 billion in the next 2 years to the Chinese government, Exim Bank of China and China Development Bank.
For the SGR alone, Kenya will take a total of $10 billion (Sh1 trillion) from China. Kenya borrowed $3.8 billion for the section between Mombasa and Nairobi and signed off another $1.5 billion for extending the line to Naivasha.
Auditor General warns that China may take over operations of Kenya Ports Authority if Kenya Railway is unable to offset SGR loans!!!
Confirmation that our Mombasa port and other KPA assets are collateral for the SGR loan on page 3!#UshenziKE! pic.twitter.com/XENIuDTPIo
— Wanjikũ Revolution™ (@WanjikuRevolt) December 19, 2018
Another $5 billion in Chinese loans is in the works for the extension of the railway from Naivasha to Malaba.
Analysts say that when the Government goes back to the IMF, an additional cushion loan or extension will not come easy. “I think the IMF will probably give the Government a benefit of doubt because of the extended electioneering period and the completion of the SGR (Standard Gauge Railway) project. Going ahead however, debt-servicing costs and fiscal consolidation will be a rigid condition to be met,” said Jibran Qureishi, Stanbic Bank Regional Economist, East Africa.
The Kenya colony was created specifically to pay for it. We paid with the “White Highlands.” Little wonder the descendants of sellout chiefs and home guards had no qualms signing away Mombasa port to the Chinese for 30 pieces of silver. Apples don’t fall far from trees. https://t.co/2PdlWrkrTo
— David Ndii (@DavidNdii) December 19, 2018
President Uhuru Kenyatta has already called for expanded healthcare scheme and even ordered that medical cover be provided to all those who sat the Kenya Certificate of Primary Education and will soon roll out free secondary education.
This will not look like fiscal consolidation to the creditors and the restructuring of the October debt will be taken as a sign of strain.