Dear IMF: Kenyans tell lender to keep its loans
Kenyans trooped online over the weekend and on Monday to protest the move by the International Monetary Fund (IMF) to continue giving the Jubilee government new loans before it accounts for previous ones.
This is after the Bretton Woods institution last week signed off a new Sh257 billion loan for Kenya. Now, hordes of Kenyans on social media are accusing the IMF of aiding corruption in the country, with some starting an online petition asking the multilateral lender to cancel the most recent loan.
PETITION TO THE IMF TO CANCEL THE KSHS. 255 BILLION LOAN TO KENYA
— Droid ? (@droid254) April 5, 2021
— Mwaniki Matu (@_AbcDennis) April 4, 2021
By the end of November last year, Kenya’s total public debt stood at Sh7.2 trillion. Going at the current pace of Sh120 billion per month, it means that debt will be at Sh8.7 trillion by December, and will have crossed the Sh9 trillion mark by June next year.
By advancing the loans without demanding accountability, Kenyans online say, international lenders risk aiding corruption and embezzlement of public funds.
“Have you ever cared to know how the loans you give to the Kenyan government are utilised? You are making individual billionaires while the rest of us keep suffering. Kenya does not need loans,” a social media user, Mr Laban Maloi, told the IMF while responding to its announcement that it had cleared new loans for Nairobi.
Nation.Africa reported on Monday that Kenya’s public debt has ballooned by more than Sh1 trillion in the last one year under the cover of fighting Covid-19 pandemic.
This now makes the period between March 2020 and March 2021 as Kenya’s worst in terms of borrowing, after the government’s appetite for debt shot up by 69 per cent.
In the eight months between March and November last year, Kenya had increased its stock of public debt by Sh971 billion.
This translates to about Sh121 billion every month, a sharp rise compared to the Sh71 billion the country was borrowing per month on average in the year to March 2020, before coronavirus hit the country.
When the government factors in the latest loans from the IMF and other development partners, and adds to the other loans taken between November last year to date, Kenya’s mountain of public debt is likely to swell by an additional Sh1.2 trillion in just one year.
This amount is enough to build three Standard Gauge Railways (SGR) between Mombasa and Nairobi that were constructed at an inflated cost of Sh327 billion.
But despite borrowing such huge amounts, the critical areas of health continued to suffer last year as medics downed their tools for more than three months.
This comes at a time when a poll has revealed that majority of Kenyans are angry about the government’s insatiable appetite for racking up debt.
According to an Infotrak study on Kenyans’ perception on foreign debt, 81 per cent of Kenyans are angry, fearful or anxious because of the country’s ballooning debt, while 62 per cent do not approve of regular borrowing from foreign sources.
Meanwhile, 52 per cent of Kenyans rate the government’s handling of its borrowed funds as poor, while 76 per cent believe Kenya gets most of her foreign loans from China.
38 per cent of Kenyans are concerned that future generations will be riddled in debt for a long time while 34 per cent believe Kenya will be unable to repay the debt and could default.
A further 24 per cent are worried that should Kenya default on paying up, national and strategic resources and infrastructure facilities could be taken over by external creditors.
As soon as Covid-19 hit Nairobi last year, Kenya stepped on the borrowing pedal hard, reaching out to multilateral lenders in a bid to build its war chest in the fight against Covid-19.
The World Bank was the first to open its purse strings, extending an immediate Sh6.8 billion support to the Health ministry for preparations and response, as it retreated to consider a bigger loan.
Then its Bretton Wood sibling, the IMF, came in second advancing Nairobi with Sh78.3 billion to deal with the pandemic. At the time, Kenya said it was expecting a major cash crunch due to containment measures.
After IMF disbursement, the World Bank wired another Sh108 billion to the Central Bank of Kenya (CBK) as both budgetary support and extra resources to help fight the pandemic.
Additionally, the African Development Bank (AfDB) also joined the fundraising effort, sending Nairobi an extra Sh22.5 billion boost as concessional loan. The European Union topped this up with an additional Sh7.5 billion in form of grants.
In just under 60 days, Kenya had already secured Sh223 billion as part of its Covid-19 war chest.