State cooked books and lied about big debt, Moses Kuria reveals

Gatundu South MP Moses Kuria.

Gatundu South MP Moses Kuria has claimed that the Government cooked books and cheated Kenyans on the state of the economy and debt levels.

This, Mr Kuria said, has subjected millions of Kenyans to untold suffering.

He was speaking on Citizen TV’s Day Break show on Tuesday morning.

In a brave admission by the Jubilee MP that Kenyans are on their own, Kuria said the Government has been lying to Kenyans on various issues, among them the debt situation and the state of the economy.

He said President Uhuru Kenyatta’s administration has committed ‘treason’ against Kenyans, which, in effect, means it has betrayed the trust of those it is supposed to serve.

“For seven years, we have lied about our debt, we have cooked books, we have cheated people that we do zero-based budgeting. We have taken loans at 9 per cent that left people offering us money at one per cent. That to me is treason…” said the MP.

He singled out Parliament as having failed in its oversight role, in effect giving the Executive a free ride to ramp up an unsustainable amount of debt.

The MP, who is also a member of the House Budget Committee, wants both the Executive and Parliament to apologise for being willing accomplices to acts of omission and commission that have brought the country to its knees.

“I want people in the Executive to offer an apology. Ours is an error of omission. Theirs is an error of commission because for seven years we have cheated this country about our deficit...

“As Parliament, we have failed Kenyans because we have sold to them the romantic story that all is well. We failed in our oversight role because we could have said NO, but we said YES, selling lies that all was well because we believed in respecting the Executive, and most of us are members of the ruling party. We have lied to Kenyans...We are doing badly as an economy,” Kuria said.

He wants former Treasury Cabinet Secretary Henry Rotich and former Principal Secretary Kamau Thugge to look Kenyans in the eye and admit that they failed them.

“I want my friends Rotich and Thugge to look Kenyans in the eye and tell them that they have committed treason,” he said.

Kuria said Kenya chose to take expensive loans because lenders such as the World Bank, whose loans are affordable, have no room for corruption.

Burn in hell

“Because institutions like the World Bank, African Development Bank and other multilateral lenders have no opportunities for kickbacks, we refuse their money and go for 9 per cent and 10 per cent. Tell me whether these people will not burn in hell?”

Two weeks ago, Parliament raised the country’s debt ceiling to Sh9 trillion, giving the Government a blank cheque to burden Kenyans with more debt.

In the financial year ending June 2019, for every Sh100 that the country earned from taxes, non-tax revenues and grants, Sh57 went into servicing debt. This compares to only Sh25 Treasury paid six years ago.

The cash-strapped Exchequer has been forced to suspend some development projects and do away with non-essential spending such as tea, advertisements and travelling, so as not to be at odds with its creditors.

And it has stopped being so cocky about the sustainability of the country’s debt, which has risen to Sh6 trillion as at August — or 63 per cent — assuming a gross domestic product (GDP) of Sh9.5 trillion.

The upper limit is 70 per cent. Debt as a fraction of GDP has increased from 42.1 per cent in June 2013. Generally, the higher the country’s debt-to-GDP ratio, the higher the risk of defaulting. It is even worse when most of the debts are in foreign currencies.

That is why starting last year, Treasury began to acknowledge the need to reverse the voracious uptake of expensive external loans lest it tips over the financial cliff. In its recent public debt management reports, Treasury has admitted that things have hardened for Kenya.

The Government says it is trying to restructure its debt by lengthening the average maturity time of its loans. It has, however, had problems restructuring its loans, with investors still preferring short-term government papers.

During the show, Kiambu MP Jude Njomo, suggested that the country could become ‘ungovernable’ as a result of creating a small club of the rich while the majority of Kenyans languish in poverty.

“We only have a small crop of people at the top who are making money while those at the bottom are not. I think this county can become ungovernable,” said Mr Njomo, also a Jubilee lawmaker.

They spoke on a day the Government pushed through Parliament changes that will subject Kenyans to more expensive loans by removing the interest rates cap.

While the Government has been arguing that the cap had forced it to borrow from the domestic market, Kuria alleged that the Jubilee government has been borrowing from itself.

He said some parastatals had kept money in banks, hoping to make a kill from savings.

He revealed that Rotich’s successor at Treasury, Ukur Yatani, had discovered Sh70 billion that was stashed away in the banks by parastatals.

“Since Ukur Yatani took over the National Treasury we have recovered more than Sh70 billion that was stored in banks. Money from the Communication Authority and the Kenya Ports Authority was all stored in banks, and the same government borrows that money then we tell the public we are over-borrowing domestic loans. That is fraud,” he said.

Economist Kwame Owino said young people could not access credit as it was too expensive. “It is evident that interest rates are too high and therefore it constrains the ability of small people to borrow money and use that for productive enterprise,” he said.

While the State insists that the reason is due to the country’s upgrade into a lower-middle-income country, which saw the flow of cheap loans reserved for poor countries stop coming, fiscal indiscipline is also to blame.

“The maturity and grace period has shortened while average interest rates have risen, reflecting the rise in loans contracted on commercial rates in the external debt portfolio,” said Treasury in the annual public debt management for Financial Year 2018/19.

Expensive dollar-denominated sovereign bonds, Eurobonds, and loans from commercial banks have pushed up the share of the country’s commercial debt, plunging the nation into new risk frontiers.