Ensure transparency in the next Eurobond
Kenya is in the market with a prospectus appealing to international investors for a piece of its latest Eurobond as Treasury seeks revenue to fund its annual budget and also to repay maturing loans.
Treasury had indicated to IMF that it would raise about $2.3 billion (Sh253 billion) through commercial loans for project financing in the new financial year, making this the fourth Eurobond in seven years.
Both IMF and the World Bank through the Debt Sustainability Analysis (DSA) stated that Kenya’s debt distress risk is high on Covid-19 shocks, slow economic growth and low exports, amidst increased spending.
Therefore, while Kenya has met all payment obligations to external creditors, and recently agreed terms for debt suspension, appetite for loans continues to increase hence the need to ensure the envisaged funds go to the intended purposes.
Some loans come with stringent conditions, but there are flexible ones which end up being abused, leading to unfinished projects while some money vanishes into thin air, in the fashion of the Kimwarer dam saga.
That is why there needs to be more scrutiny on how the funds are used and whether they are committed to the intended purposes.
These concerns stem from ambiguity that followed the first Eurobond. A lot of queries were raised with the Controller of Budget admitting she wasn’t aware of how some of the transactions were actualised.
But such intrigues have continued to date. In June, for example, Kenya purportedly signed an undisclosed Sh139.5 billion loan deal with a Belarusian and Canadian company for construction of mobile clinics, and upgrading of hospitals on the back of surging Covid-19 cases.
As Treasury moved to issue a statement on the matter, the US Securities Exchange Commission (SEC) disclosed that the purported deal had led to the firm being deregistered from the bourse.
Details remain scanty, but under the said agreement, Belarus-based Techno-Investment Module provided financing for a project purportedly labelled the Kallo Integrated Delivery System, said the SEC.
Therefore, as Treasury mulls a roadshow for the next Eurobond, it must be open and ensure that all the funds raised are delivered to the exchequer openly and spent as outlined in the prospectus. Not a shilling more or less.
Citizens have recently raised concerns including petitioning the IMF not to give Kenya more loans.
To stop such embarrassing moves, Treasury must ensure all stakeholders, including citizens, are kept abreast of the funding and utilisation.
