By LUKE ANAMI and DAVID OHITO
Kenyans will pay Sh100 billion more to service foreign debt estimated at Sh1.2 trillion should the shilling continue to fall against the US dollar.
Experts have cautioned that Central Bank and the Treasury to pursue policies that would stabilise the local unit or risk losing out in funding of crucial development projects.
The Central Bank and Governor Prof Njuguna Ndungâu have been on spot over the rate of the shillings slide. The situation has seen prices of most consumer goods skyrocket. [PHOTOS: FILE/STANDARD]
Financial analyst Billow Kerrow said the shillingâs slump against other world major currencies means taxpayers will shoulder a huge burden as funds are diverted from development projects to service debts.
The shilling has lost 25 per cent of its value since January.
"Debt is both domestic and foreign. If half of the foreign debt is serviced in dollars then we have to commit at least Sh100 billion or a similar margin by which the dollar has slumped," Kerrow said.
Parliamentary Finance Committee chairman Chris Okemo confirmed Kerrowâs assertion. He said: "If all currencies appreciate at the expense of the shilling, then the debt burden rises by a corresponding margin."
"We are in really bad times. Treasury Bills will go up significantly and even domestic debt will rise pegged on interest rates," Okemo added.
"Kenyans will fork out more shillings from revenues earned this year to service debt â both principal amount and the interests accrued. The erosion of the shilling spells doom for the country. It means poverty levels will rise as a few exporters of tea, horticulture and coffee enjoy the boon," said Kerrow.
Okemo said his committee will meet CBK governor Njuguna Ndungâu and Monetary Policy Committee Tuesday to discuss remedial measures and investigate the cause of the slump.
"We must be told who is responsible and what is the justification. This team has made recommendations about CBK officers and its policies before and we will demand answers on Tuesday," Okemo said.
