Kenya has Sh300bn debt under Kibaki, says minister

Written By Michael Maunda on Wednesday, June 27, 2012 | 12:39 PM

Finance minister Njeru Githae has said Kenya has incurred a colossal Sh304 billion debt during the tenure of President Kibaki.

The minister said Wednesday the borrowing spree that the country went into when President Kibaki took over was to improve the country’s infrastructure and to also grow the economy.

The minister submitted a schedule of the debts that include the controversial naval ship, the Nairobi-Thika super highway, the Sondu Miriu hydropower project, the Geothermal power, the e-government project and dozens of other programmes in the Treasury, the Ministries of Education, and the National Security Intelligence Service.

The money, the minister said, came from China, Japan, Korea the World Bank, the International Monetary Fund, the Africa Development Bank, European Investment Bank, Saudi Development Fund, the International Development Association, the Arab Bank, among other creditors.

Mahmoud Sirat (Wajir South) had asked for the schedule to find out if President Kibaki’s administration had distributed the multibillion –shilling projects fairly all over the country.
Donor funds
“I confirm that the funded projects using donor funds are prioritised in line with the country’s development agenda and that they are distributed evenly in the country,” said Mr Githae.

The minister also told Parliament that the national public broadcaster was duped to buy “obsolete” equipment from Japan, an action that has left the broadcaster with a Sh22 billion hole in its books. 

“The Kenya Broadcasting Corporation has never remitted a single cent to the lender. KBC has no money. It will be a waste of time to ask KBC to pay the loan,” said Mr Githae.

James Rege (Karachuonyo) sought to know if the minister had taken any steps to ensure that the KBC loan was either converted into a grant or written off. The minister said the Treasury was working on it.

“In my view, the Japanese just dumped all the equipment in the country because they were obsolete. In such a case, you don’t blame the lender, you blame the borrower. It is sad that Kenya bought obsolete equipment,” said Mr Githae

The loan from Japan for the Medium Wave (MW) equipment was a government guaranteed loan.
Initially, when the equipment was procured (in June 28, 1989), it was valued at Sh2.3 billion (16 billion Japanese Yen) at a rate of Sh7.4 cts/100 Yen and an interest of 2.5per cent which was payable semi-annually.

When the project was completed in 1994, the debt stood at Ksh 8.2 billion with an exchange rate of Sh54/ 100 Yen. The fluctuation of the exchange rates therefore caused the increase of the loan to Sh22 billion.

Source: Daily Nation