Ndii faults State on cash mop up from parastatals
Economist David Ndii says a move by the State to hand over cash reserves, Treasury Bonds and A-in-A revenues to the National Treasury will impair the cash flow of these corporations and in effect, operations and service delivery.
“The state corporations which have had their own resources will now have to depend on the notoriously unreliable and unpredictable exchequer releases,” he said on a Twitter thread.
He said that while the memo suggests that the cash will settle pending bills, the move is far from solving the problem, as it has now transferred it to parastatals whose suppliers will now be at the mercy of the exchequer.
“Expect some parastatals to default on their suppliers in coming days,” he said.
The key driver of the government’s financial crisis being foreign debt, the economist said that part of the money confiscated from parastatals is going to pay the foreign debt.
“Instead of circulating in the economy it is going to China. Another body blow to an already battered economy,” added Ndii.
Ndii said that it does not matter that these are state corporations, noting that these debt instruments are backed by law, and the government/debtor has suspended law.
“When it gets more desperate as it will, what will stop it doing the same to other vulnerable investors eg. public pension funds?” he posed.
Ndii said by resorting to such a draconian action, it has exposed that its more distressed than its been letting on. Expect investors to take note.