‘It is not possible,’ Economist Kwame Owino dismisses Kenya Kwanza figures on national debt

The Institute of Economic Affairs CEO Kwame Owino has dismissed figures presented by Amani National Congress (ANC) leader Musalia Mudavadi on the country's debt following the handshake between President Uhuru Kenyatta and ODM leader Raila Odinga.

This comes after Mudavadi, a Kenya Kwanza Alliance co-principal, on Monday warned the National Treasury against committing the country to any more debts.

According to Mudavadi, Members of Parliament should ignore calls by Treasury Cabinet Secretary Ukur Yatani to modify the debt ceiling to 55 per cent of the country’s GDP.

The ANC leader similarly alleged that the country’s debt stood at Ksh. 4.5 trillion prior to the March 2018 handshake between President Kenyatta and Odinga, and has since risen twofold since.

“The contest is how much was owned before 2018 and then thereafter. It is not possible under any mathematical figure to have had Kenya’s debt at Ksh.4 trillion because the reason the debt ceiling was extended was that the debt ceiling was at Ksh.6.5 trillion by the end of 2017,” said Owino during a interview on Citizen TV’s Monday Report show.

The reason Kenya's debt ceiling was extended, Owino continued, is because the country's loans position was normal and substantial enough to allow for it, as such it would be unreasonable to purport that Kenya is adding onto its debt with no intention of paying it back.  

"I think Kenya Kwanza needs to recheck those figures,” he said. 

Owino however clarified that Mudavadi’s utterances might have had some truth to them especially since the national exchequer’s way of measuring debt does not involve the government underwriting debt from other State corporations or even countries.

“The Constitution requires that the national government actually guarantees debt so if you put that all together it makes it much larger than what was declared conventional but the idea that it was Ksh.4.1 trillion by 2017 is obviously just a lie or completely mistaken Mathematics because it is not possible because the extension was made at the place of Ksh.6.5-7 trillion so at that point, it was already a breach,” he explained.   

Owino similarly chimed in on Kenya’s cost of living saying an increase in the price of commodities does not necessarily translate to a surge in the cost of living, citing that increased price of commodities is a result of high taxes slapped on many of the commodities that Kenya imports.

“Globally, petroleum prices have been rising in the last few months. The Kenya shilling has also weakened from last year October and this is not aiding our situation,” he said.

“Additionally, Kenya does not produce enough common items for itself hence has to import. If you are importing things obviously that will have an effect on commodity prices.”