New debt office must stem irresponsible borrowing
SEE ALSO :Time to watch exchange rateHowever, there have been growing concerns over the sustainability of the public debt – estimated to hit Sh6 trillion by 2020- given sagging productivity. And the main grumble is not that the economy has been slow to expand but rather that a huge percentage of the funds is lost through corruption and wastage. A misspent or stolen loan is a heavy burden- it counts as double loss. If the debt can be managed, the better. Not just its use, but when to get it and from whom. And this is where the National Debt Office comes in handy. Its broad roles include resource mobilization; developing a debt policy after assessing the risks and drawing up settlement schedule of accrued debt. During President Kibaki’s administration, the debt was mostly local with only one syndicated loan. The present government has taken two Eurobond loans, almost eight syndicated loans, Chinese budget loan and one from Afriexim bank. The problem with this is that syndicated loans are expensive, short-term bank loans and Eurobond have massive principal repayments. When all these loans are crowded together, they simply cannot be paid organically. That makes taking up more debt inevitable; a sure ticket to debt trap. Just to be sure, this newspaper has insisted that borrowing is healthy; debt is a good ingredient of development. What we have advocated is prudent spending of the borrowed funds. Clearly, a lot of things have gone wrong at the National Treasury and the World Bank cautioned about the lack of a debt management office.