The latest government loan of Ksh 255 billion from the International Monetary Fund (IMF) sparked an uproar among TBEN who denounced the economic crisis in the country.
This led more than 150,000 TBEN to sign a petition asking the international body to cancel the loan. Further, #StopGivingKenyaLoans has been all the rage for the past three days as more people have expressed concerns about the government’s borrowing frenzy.
Speaking to TBEN.co.ke, famous economist and political strategist Dr David Ndii claimed that the petition did not have the power to refrain or cancel the IMF from granting the loan to Kenya.
A file image of Treasury CS Ukur Yatani
“The IMF is acting for creditors, it is not acting for TBEN. For example, if a bank sends a receiver-manager to your business, you don’t start telling the receiver-manager what they can and cannot do.
“I told the TBEN that the IMF is not there to help us, in fact when you see the IMF it creates problems because it is usually a sign that a country has bottomed out in terms of debt situation, ”Ndii said.
His remarks were echoed by economist Tony Watima who stressed that the petition did not have the power to cancel but that it could help attract the attention of the IMF board.
“As for the petition signed by the TBEN, it could help by attracting the attention of the IMF after they release the first batch of funds,” Watima said.
The two economists claimed that the majority of people misunderstood the role of the IMF and its relationship with the Kenyan government.
“The IMF is usually the last resort for which a country finds itself in an economic crisis. Ideally, when a country is heavily indebted and on an unsustainable trajectory, the government invites the IMF to step in and help restructure itself back to sustainability through lending. However, conditions are placed before the loan is approved, ”Watima said.
He added that in the case of the Ksh 255 billion loan, it is intended for budget support that involves balance of payments, constitutional and public sector reforms in order to stabilize the country’s economy.
“The IMF loan that Kenya has taken out is called a structural adjustment loan. This means the government will institute tax increases, spending cuts, operations reduction in order to maintain Kenya’s creditworthiness so that we continue to borrow and service the debt. The IMF is not here for fun, ”Ndii weighed in on the matter.
Watima also revealed that the loan is usually disbursed in batches, with the first allowing Kenya to acquire Ksh 35 billion. For the government to obtain the second batch, it must have fulfilled the conditions stipulated by the IMF.
The two experts, however, underlined the dire consequences the country could face if Kenya defaults on its loan.
“If Kenya defaults, our banks cannot get credit lines, which means we cannot import anything, so we are excluded from the global financial system,” Ndii said.
The loan crisis in the country has been a source of concern for many TBEN who are grappling with the high cost of living and the economic crisis.
President Uhuru Kenyatta at a previous press briefing