Yatani rules out costly loans to fund post-Covid recovery
The government will go for concessional loans as it looks forward to recovering from coronavirus induced economic shocks, National Treasury Cabinet Secretary Ukur Yatani said yesterday.
Yatani said they will also look to improve public-private partnerships in a recovery process and entrench Information communication technology (ICT) into the processes.
“We have come up with a recovery process that is going to take us a number of years.
We are going to look at resource mobilisation not from loans but by ensuring PPPs work as expected and also entrench the place of ICT because we have realised this can help in the turnaround of the economy,” he added.
Yatani who was speaking yesterday, during the National Covid-19 conference attended by President Uhuru Kenyatta at the Kenyatta International Convention Centre said Treasury plans a raft of measures which include expanding the tax base and deepening austerity measures as part of his post Covid-19 recovery plans.
“We shall streamline tax administration to ensure those people who need to pay taxes, pay,” he said.
The CS said the government will borrow sustainably from the concessional window if need be and will get rid of commercial loans.
“You can only sustain it with your own resources by sustaining the net winder,” he said.
The country’s current total debt is estimated at over Sh6.6 trillion, at the end of May this year compared to Sh 6.4 trillion in April and Sh6 trillion in February.
This is a concern that has seen the government turn to local loans to fund its budget.
Figures from Central Bank of Kenya (CBK)’s recent weekly bulletin show that out of this debt load, total cash borrowed from the domestic market stood at Sh3.2 trillion while external borrowings stood at Sh3.49 trillion.
In the three months to August, the National Treasury borrowed Sh200 billion, with fears the insatiable appetite for commercial loans could end up seeing the debt burden to taxpayers rise to Sh7 trillion.
When the International Monetary Fund predicted doom for the global economy at negative 4.9 per cent of gross domestic product for economies across the globe while Kenya and the region, was to grow at negative 1 per cent.
Mitigating measures
Faced with the circumstances, Yatani said it was imperative for the National Treasury to step in with mitigating measures to stem a further slide down in the trade and productive sectors, as well as financial services.
“There was also a compelling need to continue servicing the country particularly in expending more in the health sector. We therefore had to come out and underline the critical elements that needed to be underscored,” he said.
When the pandemic was first reported in the country in March, the government came up with a stimulus package designed to contain a steady liquidity in the economy, cushion business and sustain the available jobs and to support those who had lost jobs.
National Treasury Principal Secretary Julius Muia said a total of Sh134 billion was mobilised by the government out of which Sh53 billion has been Covid-19 related expenditure while Sh29 billion was utilised as budgetary support.
