Kenya’s debt crisis a result of theft – Raila

The opposition Coalition for Reforms and Democracy (CORD) leader Raila Odinga has accused the Jubilee administration of poor governance that has plunged the country into a debt crisis.

Odinga, while addressing the Law Society of Kenya (LSK) Conference at the Coast, said that it is now becoming expensive to live in Kenya as the cost of living has been escalating since Jubilee took power.

“Ensuring a decent standard of living for all citizens is a cardinal duty of the State. It is a critical element of governance. But let’s look at the state of our economy. Officially, we are being told that our economy is doing great, that Kenya is the preferred investment destination in Africa and that we have never had it so good,” noted Odinga.

“We are not being told that never in history has this nation wallowed in so much debt. The Government says the ratio of our national debt to the GDP stands at 48 per cent. Independent analysts, whom I believe are right, say our debt ratio is at least 52.6 per cent of the GDP.”

He added that in the past three years, the public debt has risen from Ksh 1.633 trillion to Ksh 3.239 trillion, an increase of Ksh 1.606 trillion or 98 per cent.

“In the 2015/2016 Financial Year, the National Treasury provided for Ksh 362 billion for debt repayment. This figure has risen to Ksh 433 billion in 2016/2017, an increase of Ksh 71 billion or 20 per cent in one year. At this rate, in five years, this country will be spending all the tax collected in repaying public debts with nothing left for capital and recurrent expenditures.”

The outspoken CORD leader noted that the increasing public borrowing has resulted in undesirable fiscal consequences such as high interest rates, inflation and overburdening future generations.

“And when we are asked to rein-in banks to enable our citizens get some relief, we prevaricate. That cannot be good corporate governance. It is a pointer to recklessness and conspiracy against citizens.”

He added: “At no time in our history have we carried a tax burden as heavy as we do now. In January 2015, the government reintroduced Capital Gains Tax, thirty years after it was abandoned. Earlier in 2014, the Government announced plans to abolish many corporate tax holidays. This was hailed as a means to broaden tax base and fund many essential services. Instead, the reverse has happened. We have gone deeper into taxes especially VAT, pushing cost of living higher up. Last week, the price of petrol, diesel, and paraffin went up for the second time in less than two months. Last July, prices of petrol, diesel and paraffin went up because the Government increased levy by up to 50 per cent.”

The opposition chief says that the country is not in debt problem “because we haven’t taxed enough” but because “we steal much of what we collect and what we borrow, then we spend what remains on wrong priorities.”

He is now challenging the government to make efforts that are geared towards saving the country from sliding further into a bigger debt.