Treasury Cabinet Secretary Njuguna Ndung'u

According to the Treasury, the nation is experiencing severe cash flow problems as a result of maturing loans, which have caused a delay in the funding of several development projects.

The government is facing financial difficulties as a result of maturing short-term debts, the declining value of the shilling, and rising interest rates, according to Treasury Cabinet Secretary Njuguna Ndung'u's testimony before the Finance and National Planning Committee.

"The weakening shilling, high-interest rates, and short-term debt repayment—all of which have raised our expenses by Sh145 billion—have left us in a precarious financial situation, "according to Prof. Ndung'u.

"We are dealing with a lot of outside headwinds in addition to unfavourable outside shocks. We are managing short-term debt while confronted with a liquidity problem. However, I want to reassure everyone in the nation that there is no bankruptcy catastrophe at hand."

The National Treasury budget cutbacks included in Supplementary Estimates I was defended by Prof. Ndung'u when he appeared before the committee led by Molo MP Kuria Kimani.

He claimed that because of the maturing debt, the nation is currently experiencing short-term liquidity issues.

According to Prof. Ndung'u, the Treasury is furthermore under strain from several underlying issues, such as excessive taxes and living expenses.

"We should lower the taxes, many have been saying. But supply-side issues are the root cause of the expense of living. Prof. Ndung'u stated that although inflation has decreased to 6.9%, it is still there due to the high price of fuel.

Prof. Ndung'u remarked, "The figures are extremely alarming as Cabinet Secretary Davis Chirchir for Energy and Petroleum suggested that fuel prices in Kenya might reach Sh300 per litre should the conflict between Israel and Hamas continue."

"We have suffered greatly as a result of the United States' exchange rate and interest rate structure adjustments."

According to Prof. Ndung'u, the public debt increased by Sh145 billion in the first quarter of the current fiscal year, with an increase of between 4.3% and 5.2% due to changes in interest rates and currency rates.

Although rising fuel costs are a worldwide concern, Mr Chirchir said on Monday during the National Dialogue Committee hearings that government measures have prevented additional increases in pump prices.

"We are limited in our ability to influence global fuel prices. I just came across an article stating that the Israel-Hamas conflict might push worldwide crude prices up to $150 per barrel. 

" This would result in our goods reaching a peak price of Sh300 per litre at the gas pump. We sincerely hope it never makes it there," the CS stated.

Professor Ndung'u informed the committee chaired by Kuria and Kimani that Kenya will find it challenging to break into the global loan market for low-cost financing because of the high-interest rate structure.

According to him, Kenya is getting ready to make a swift payment on a Sh300 billion Eurobond that matures in June of the next year.

"The $2 billion Eurobond payment is the biggest issue in the room. All eyes are on Kenya's ability to make the June payment, and Prof. Ndung'u noted that everyone is wondering.

"I persuaded the World Bank's and the International Monetary Fund's (IMF) annual conference in Marrakesh, Morocco, that we cannot default on our public debt. I am responsible for ensuring that we will pay the Eurobond, no matter what.

According to Prof. Ndung'u, the government would purchase back a certain amount of Eurobond for the Treasury to eliminate the possibility of a Eurobond default.

"Everyone is under the impression that the government will purchase dollars and settle the Eurobond. We would repurchase a portion of the Eurobond to calm people down," Prof. Ndung'u declared.

He claimed that the IMF and the World Bank had promised to assist the nation in paying down its debt and easing its cash flow issues.

Budget changes have been implemented to guarantee that the nation is living within its means, according to Treasury Principal Secretary Chris Kiptoo.

"Our circumstances are precarious. The budget has increased by Sh145 billion as a result of rising interest rates and the weakening shilling," he stated.

"However, we anticipate receiving $4–$5 billion from the IMF, WB, and other donors by June of next year."


Post a Comment

What is your say on this

Previous Post Next Post