By Simon Kahara
|Finance expert and the chairperson at Political Parties Liaison Committee Irungu Nyakera at a past function. He has warned that the country’s huge debts will son land the country into restriction in international markets.|
Kenya’s Financial expert Irungu Nyakera has warned that Kenya’s ballooning debt risks the country for being restricted in international markets a move that will lead to an economic crisis.
Mr Nyakera, a banker who have worked as the Managing Director of Equity Bank’s Investments wing and a man with vast experience on economy and banking sector raised concerns after the global rating firm Moody’s downgraded Kenya’s sovereign credit outlook from B2 moderate to B2 negative.
In its periodic review the global rating firm raised concern over the country’s very low fiscal strength, ballooning debt and runaway corruption due to weak rule of law.
It added that the government’s debt burden and poor revenue collection performance; and susceptibility to event risk predominantly stemming from government liquidity risk piles pressure on the country’s ratings.
Mr Nyakera while describing the news as the worst for the country’s economy, said the ratings by the firm was by far worse than Coronavirus.
“In my opinion, the worst news for our economy right now is not even Coronavirus, it’s that yesterday Moody’s downgraded our sovereign credit rating outlook from B2 “moderate” to B2 “negative.
He says the main trigger behind the revision is the rising financing risks posed by Kenya’s large gross borrowing requirements at a time when the fiscal outlook is taking a nosedive due to both lower tax collections and an unsustainable debt structure.
“This could mean a whole lot of negative eventualities for our economy including restriction to international markets for more debt that could easily and irreversibly expose Kenya’s fiscal metrics to exchange rate and interest rate shocks.
Mr Nyakera further warns that even as the country keep escalating spending on non-essential infrastructure and government bureaucracies and failing to put breaks on our exaggerated borrowing, the country faces a default situation and then an economic crisis, prolonged economic slump which will then lead to a recession and then a depression.
He wonders whether leaders and the Treasury are aware of the situation and wonders what they are doing about it.
“Are our leaders and treasury pundits and mandarins reading these “all-too-obvious” signs,” Mr Nyakera says.