NASA Principle Musalia Mudavadi has accussed President Uhuru Kenyatta of ‘deliberately’ plunging the country into a financial crisis through excessive external borrowing.
The former Finance minister says Kenya’s external debt has for the first time exceeded its domestic debt, a situation that will only see Kenyans endure worse days ahead. “Even in a private enterprise, if you are a manufacturer you must have proper balance of equity and the debts. You need to finance development but you must not enter a scenario where the debts overwhelm the equity,” Mudavadi said.
The former Vice President said Kenya is facing a serious financial crunch which could get worse if the value of the shilling in the internal market dips.
“The exposure of Kenya could become bigger and rapid if there is a depreciation of the shilling. This is something that we must be worried about,” he said.
The Nasa co-principal said the government was broke despite putting on a brave face as it raids taxpayers’ pockets to service loans.
“We are in a situation where the government wanted to construct so many roads, dams and the SGR within a limited time. This has resulted to rapid and uncontrolled borrowing,” Mudavadi said.
He told the government to stop playing down the current financial crisis and instead face the reality of the impending financial crisis.
He further added that it was a lie by the government that the 16 per cent VAT on fuel was a condition set out by the International Monetary Fund during the budget-making process..
“The way I look at it is that people see things moving in the wrong direction but they are not addressing it. To turn around and say this is an IMF conditionality may not be exactly accurate,” Mudavadi said.
He said the tax is not to fund the budget deficit as claimed but to service loans.
“About Sh100 billion Eurobond installment is due. It was supposed to be repaid sometime last year but I think the Treasury had to negotiate for the postponement,” he said.
The loans have put pressure on the government to raise funds to service them, Mudavadi said. “So the government has to look for a quick way of getting resources,” he said.
President Uhuru’s government has been under pressure to reduce its external debts and embark on austerity measures to raise enough revenue locally to fund the budget, whose deficit stands at over Sh500 billion.