Par­lia­ment should rein in gov­ern­ment bor­row­ing

The Star (Kenya) - - Voices -

Pres­i­dent Uhuru Keny­atta is be­ing un­re­al­is­tic when he calls on the banks to fur­ther lower the cost of bor­row­ing (see page 18). The rea­son in­ter­est rates are high is be­cause gov­ern­ment is bor­row­ing from the mar­ket to fi­nance large in­fra­struc­ture projects, among many other things.

Trea­sury Bond rates should be brought down and gov­ern­ment’s ap­petite for big bor­row­ing needs to be curbed. What’s more, gov­ern­ment needs to go back to pay­ing its debts.

After the cap on in­ter­est rates that Pres­i­dent Keny­atta as­sented to in Au­gust, Par­lia­ment needs to ad­dress gov­ern­ment bor­row­ing. The state is so vo­ra­cious for credit that Par­lia­ment should bring in leg­is­la­tion to stop it from bor­row­ing at the drop of a hat. The rate for a one-year Trea­sury Bill is 11 per cent, so why lend to a bank client at 14.5 per cent?

The Pres­i­dent is right when he says more and more Kenyans want ac­cess to af­ford­able credit. Bring­ing down gov­ern­ment bor­row­ing will be one ma­jor way of bring­ing about eco­nomic trans­for­ma­tion.

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