From: Ouko joachim omolo
The News Dispatch with Omolo Beste
WEDNESDAY, AUGUST 7, 2013
One of the News Dispatch readers who is also a civil servant employee has just confirmed to the News Dispatch that their July salaries have not been dispatched to their various banks contrary to what the Deputy President William Ruto claimed. She wants to know whether the government of Kenya is actually broke.
Another reader would like to know whether it is an act of impunity for the Jubilee parliamentary committee members to argue that William Ruto should not be crucified over his luxurious jet trip since former PM Raila Odinga and VP Kalonzo Musyoka also had luxurious trips abroad.
Although there is a lot of talk going around that the government is broke, according to Business Weekly News Kenya is not broke because if it was, it would mean that Kenya was out of money, unable to pay bills, or meet its financial obligations.
The fact however remains that Kenya does not have enough money to cater for its budget. A lot of money is going towards debt repayments. Currently the government owes Kenyan and foreign households as well as institutions a collective Sh1.8 trillion (based on April 2013 figures), and this borrowing has significantly increased over the decade.
This amount is beyond Kenyan budget of Sh 1.6 trillion for the year 2013/14. This is despite the fact that national debt should be benchmarked to the size of a nation’s economy or income. The combined total debt is currently about 49 per cent of GDP.
This is of course, to bear in mind that the real risk from government debt is the burden of interest payments. Countries can remain perpetually indebted so long as interest payments don’t go out of control. That is why Kenya should really care about its debt’s annual carrying cost, especially in relation to the size of its economy.
As at the end of April, debt servicing as percentage of GDP stood at 3.2 per cent. This is what worries Kenyans because when interest payments reach about 12 per cent of GDP then a government will likely default on its debt.
We must accept that Kenya is currently loading up big sums of debt. Yet Kenya continues to borrow many times what it used to borrow a decade ago at a fraction of the cost it used to. So debt structure matters a lot as Kenyan economy is concerned.
About 57 per cent of the national debt is domestic and is held by local commercial banks, insurance companies, parastatals and building societies among others. The remaining 43 per cent is held by foreigners.
The other scenario as The Kenyan Daily Post exclusively reports is that Jubilee Government is currently broke due to the fact that it used large amounts of money to fund the campaigns of President Kenyatta and his Deputy William Ruto before the March 4 general elections.
Currently the government has no money to pay over 450,000 civil servants, including teachers, doctors and MPs. Key indicators of a broke Government include inability to meet its recurrent expenditure (paying salaries, servicing loans etc), reduced revenue collection, sudden increase in taxes (VAT), and disposal of assets, excess domestic borrowing, and slow implementation of commissioned long term projects.
Unlike Uhuru Kenyatta’s government, the Kibaki administration did well in seeking ways to lengthen the maturity of its domestic debt. It successfully issued a 25-year bond, which was a major boost for investor confidence and helped the government access cheaper and longer-dated debt.
Uhuru Kenyatta and his deputy Ruto cannot boost investors’ confidence and helped the government access cheaper and longer-dated debt because of the International Criminal Court (ICC) pending at The Hague.
While it could be true that the president and the Vice president are not the only ones who we’re responsible for the 2007/08, a discourse of the two politicians being made the sacrificial lambs is currently affecting Kenyans dearly.
It remains to be seen what is going to happen in the coming days since it appears their cases might be collapsing at the ICC on account of witnesses pulling out and as a result of lobbying in high places by Uhuru administration.
The lobby begun before Kenyatta and Ruto took over Kenya. It began with former VP Kalonzo Musyoka, the then country’s Trade minister Chirau Mwakwere to Bosnia and Lebanon, while Agriculture minister Sally Kosgei and East African Community’s Hellen Sambili to Brazil after Mr Musyoka’s meeting with UN secretary general.
The first round of shuttle diplomacy saw Mr Musyoka leading a number of ministers in lobbying mission in a number of African countries and cost tax-payers more than $362,450.18. Former legislator Paul Muite accused the government of further using taxpayers money to collect signatures from the public against the ICC process. Mr Muite said chiefs were paying individuals $2.5 each to sign a petition against ICC.
President Mwai Kibaki dispatched then Vice President Kalonzo Musyoka to see the heads of state of the African countries that at the time were members of the UN Security Council, namely Gabon, Nigeria, and South Africa. He also went to neighboring Uganda.
Two other cabinet ministers were sent to six other African countries. All this happened in the first three weeks of January 2011 ahead of the regular African Union (AU) heads of state and government summit, which was held at the end of January.
The message to the different African capitals was that Kenya had enacted a new constitution just five months earlier in August 2010, which triggered the transformation of the Kenyan state, including enhancing the independence of its criminal justice system.
President Kibaki’s representatives told the African leaders that Kenya needed time to implement those changes to the criminal justice system so that any suspected perpetrator of the violence that nearly tore up the country in January-February 2008 could be tried at home.
The side of the coalition led by then Prime Minister Raila Odinga was opposed to the attempt to get the cases deferred by the UN Security Council. Their argument was that Kenya had already tried to set up an independent tribunal to handle the post-election violence cases and failed, so the ICC cases should be allowed to run their course.
Recently William Ruto undertook his first diplomatic tour since ascending office-diplomatic onslaught which has been around what is currently referred to as the Jet Scandal. This involves the manner in which the office of the Vice President went about procuring the services of a luxurious jet and the price the state will pay for this trip.
What has annoyed the public is the huge sums of money involved in this West African trip while the government has been busy advocating for austerity in spending of public funds. So it is not whether Raila and Kalonzo also used huge sums of money during their tour, it is a burden Kenyans are forced to carry what is not beneficial to them.
If the case fails to collapse as is the wish of Kenyatta and Ruto, it means they will be unable to travel except to countries that do not recognise the ICC court. It will mean that aid to Kenya, including training the Kenyan armed forces, will be cut. British and US naval ships will stop using Mombasa port. Kenyans will find it harder to come to Europe and the US.
Concerning the question on impunity, yes, it is the act of impunity for the Jubilee parliamentary committee members to argue that Ruto should not be sacrificed when Raila and Kalonzo also used luxurious trips.
It is this impunity why throughout the years Kenyan presidents have failed to send to jail those who have regularly looted the state through scams such as Goldenburg and Anglo Leasing.
Fr Joachim Omolo Ouko, AJ
Tel +254 7350 14559/+254 722 623 578
E-mail omolo.ouko@gmail.com
Facebook-omolo beste
Twitter-@8000accomole
Real change must come from ordinary people who refuse to be taken hostage by the weapons of politicians in the face of inequality, racism and oppression, but march together towards a clear and unambiguous goal.
-Anne Montgomery, RSCJ UN Disarmament Conference, 2002