All is not well with President Uhuru’s government as banks respond to economic meltdown by adjusting their interest rates upwards.
Almost every single bank in Kenya increased interest rates by 6 %, meaning that the bank with the lowest lending rate will charge 23 % up from 14 %.
Though Treasury Cabinet Secretary Henry Rotich is wearing a brave face, all is not well with Uhuru’s administration. The situation is so serious that the government has held two high level meetings in just a week, to look for ways of saving the economy from collapsing.
The rumour that the country is broke is actually true. Last week, the government had to beg IMF for a loan, which will be used to cater for infrastructure development and also pay part of the loan that they owe local lenders.IMF gave several conditions, among them requiring the Government to retrench 40,000 employees. The exercise will resume in two months’ time.
We can confirm that IMF has accepted to give Kenya Sh155 billion loan, but with serious conditions which they gave the government 2 months to implement. This means that Uhuru’s administration will not be eligible to borrow from external sources since the country has reached its debt ceiling.
It has emerged that, though Kenya received over Sh 200 billion from the Eurobond, most of the funds received is unaccounted for. It’s believed that senior government officials opened offshore accounts and deposited a huge chunk into the account to earn interest, which will be pocketed of course.
The Eurobond was supposed to cushion the country against rising interest rates and also repay part of the loan that the government owe local financial institutions. Until now, the money cannot be traced whereas borrowers are having sleepless nights.
As we speak, the only hope for Treasury is the anticipated loan from the IMF, which the former President Mwai Kibaki ignored while he was in power. If the government misuses the loan then we’ll all sink with the country and only compare with Greece and Zimbabwe.