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{
    "id": 1216792,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1216792/?format=api",
    "text_counter": 73,
    "type": "speech",
    "speaker_name": "Kiharu, UDA",
    "speaker_title": "Hon. Ndindi Nyoro",
    "speaker": null,
    "content": "I want to, first of all, address the issue of borrowing because it is the issue that informed the reduction of the Ksh300 billion. We heard Treasury officials who were there before arguing that majority of the economies borrow money and, therefore, it is not an entirely bad thing to borrow. I agree and disagree on the same matter. Hon. Speaker, borrowing is good. Every country borrows. The United States of America (USA) is one of the countries that we seek to be like in terms of Debt-to-GDP (Gross Domestic Product) ratio. In Kenya, we are talking about 70 to 80 per cent Debt-to-GDP ratio. An economy like the United States of America is in excess of 100 per cent. The United Kingdom (UK) is also in excess of 110 per cent Debt-to-GDP ratio. Japan is now the front runner – the outlier in that field because it has borrowed in excess of 250 per cent Debt-to-GDP ratio. However, comparing Kenya with the economies that I have enumerated to the kind of conditions that we are facing is like comparing a camel to an apple. There is nothing to compare! On the first front, when we talk about borrowing, the first thing you consider is cost. For example, the current cost of borrowing in Kenya for the last 10-year bond to the last data, I saw, was just around 13.6 per cent exempt of tax. Having that kind of interest rate in terms of cost of borrowing is, therefore, not sustainable – and I am saying that comparatively. When you track the 10-year borrowing of the Japanese Government, you will realise that some years back, they were able to raise money on negative interest rates. What I mean is that at some point in the last 10 years, the Japanese Government borrowed on negative rates. On that front, therefore, there is no way we can compare Kenya with the kind of economies I mentioned. On the second front, is usage. Some of these countries borrow strictly for development. Using the tabulations that I gave earlier, you will realise that most of the money that we borrow is not extended in so far as the spirit of the Constitution would provide. That we should borrow money which strictly goes into investments – what we call development. Some of the monies we have been borrowing have been going to recurrent expenditure. There is no economy across the world that is prudent that encourages borrowing for recurrent expenditure. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}