How times change! Yesterday's government critics are now its strongest defenders, while its founders are being vilified as scaremongers likely to frighten off investments.
This is the scenario playing out between the current Treasury Cabinet Secretary, an expert borrowed from the opposition's Orange Democratic Movement, and Kiharu MP Ndindi Nyoro, who, just a few weeks ago, was the chairman of the Budget and Appropriations Committee.
The two antagonists, who are now serving reversed roles, have started trading jabs in what promises to be an interesting ideological duel. Mbadi has lashed out at government critics, accusing them of painting a gloomy picture about the country's debt situation, claiming this could cause unnecessary panic.
Mbadi dismissed remarks pointing to challenges in debt sustainability, saying there is no point at which Kenya will default on loan repayment because the country is economically strong.
He urged leaders to be cautious with their statements, slamming former Budget and Appropriations Committee chairperson, Ndindi Nyoro, over his remarks about debt being the greatest threat to the country, which he argued could spark panic.
"I am appealing to leaders that we are privileged and need to be cautious. I listened to one of us argue that this country is likely to default on debt repayment, and that is an irresponsible statement. It can cause panic and should not come from someone who has chaired the Budget and Appropriations Committee," he said on Wednesday, in Parliament.
Mbadi admitted to challenges faced in the past but insisted that the country is now in a better position and does not have issues with debt sustainability, as the figures are publicly available.
"The International Monetary Fund and World Bank have the figures. We have been rated internationally, and the problem we face is about liquidity. Loans were taken at a particular point in time, and most of them are maturing between now and 2032, which is why we are under pressure," he said.
According to Mbadi, from 2034 to 2048, the country will have no external loans to pay, whether commercial or bilateral.
However, he stated that between now and 2032, the National Assembly, Treasury, and the Executive have a responsibility to steady the economy and must work together.
"That is why some of us were taken to the Executive as experts — to make sure we steer this ship. There will be no external loans to pay around that time, whether bilateral, commercial, or multilateral. We don’t have many loans. So, don’t be discouraged. This process will continue. I am committed to it. There will be no time when we default on our loan repayments," Mbadi said.
Similarly, Mbadi asserted that the country is economically strong and the strongest in the region.
"Let nobody scare people into thinking Kenya is going to default. We may be struggling, but let me ask you, have we failed to pay salaries? No. Have we failed to pay capitation to schools? We paid in full. Are we failing to meet our expenditures for security and other matters? No. Are we going to release the entire CDF for infrastructure development in schools and for bursaries? Yes," he stated.
Mbadi was responding to remarks made by Nyoro earlier in the week, in which he described the debt situation as the greatest threat facing the country today.
“I do not think we are taking the seriousness of this matter as we should, and I also do not think those responsible are communicating enough about the debt issue. When you are in a hole, there are many ways to get out, but one of the ways you cannot get out is to continue digging the hole," he said.
He noted that the government still has much to do to resolve the debt situation, pointing out that, when tracking debt from 2003 during the late President Mwai Kibaki’s time, Kenya's debt stood at Sh600 billion when Kibaki took office and was about Sh1.8 trillion by the time he left office.
During this period, revenue collection was about Sh200 billion in ordinary revenue and grew to about Sh1 trillion.
“The debt grew from Sh600 billion to Sh1.8 trillion, but look at the growth in revenue collection, which was roughly double that of debt accumulation. We are now talking about Sh10 trillion,” he said.
Nyoro also pointed out that while the country’s Sh3.8 trillion projects growth, Sh1.25 trillion to Sh1.3 trillion of this figure is allocated to something called the Consolidated Fund Service (CFS).
Out of Sh1.25 trillion, over Sh1.08 trillion is used to pay interest on debt, a figure that will rise in the next financial year. Nyoro stated that nothing can be done about this scenario, particularly in funding constitutional bodies and pensions.
Regarding salaries for public servants, Nyoro said these range between Sh600 billion and Sh700 billion, with an additional constitutional requirement of at least Sh400 billion to fund counties. All these responsibilities must be catered for.
At the end of the day, he said, the country is left with a development budget of about Sh700 billion, which over the years has remained merely aspirational.
“You budget Sh700 billion, and by the end of the financial year, you are Sh300 billion short in revenue collection. You cannot cut payment of interest rates, CFS, or salaries. So, when the Treasury receives revenue, it prioritises these other expenditures, leaving development as the last to be funded,” he said.
He added that the budget-making process continues to be decimated.
With heightened activities surrounding the Independent Electoral and Boundaries Commission (IEBC) in the coming days, which requires at least Sh60 billion, Nyoro noted that this amount surpasses other development budgets, such as for roads.
