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{
"id": 1545151,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1545151/?format=api",
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"type": "speech",
"speaker_name": "Sen. Onyonka",
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"speaker": {
"id": 13592,
"legal_name": "Onyonka Richard Momoima",
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"content": "thank you for noticing that we need to separate the Central Bank of Kenya and the National Treasury from the Executive. That is, in fact, one of the challenges that we are going to face as a Committee, and we are going to interrogate this. I also want to give credit to my brother, Sen. Mungatana. Thank you, Sir. Your experience and time have enabled you to analyze these issues impassionedly. I believe that what you have discussed will make Kenya a better place. Mr. Deputy Speaker, Sir, the public debt management issue in our country is at a crisis level. The reason I say this is because, we have been looking, analyzing and discussing, what the cost of our debt. Why do we borrow so much money? Why is it that, in the last 10 years, close to 12 years, we have increased our debt by 100 per cent? When President Kibaki was the President of the Republic of Kenya, our debt was, by the time he was leaving, Kshs1.1 trillion. After that period, and you look at where we are right now, our debt is close to Kshs12 trillion. The question that you ask when you sit in this House is, what is it that we need to do to make sure that this exercise, which I call an exercise in futility, where we are borrowing excessively, where we are borrowing domestically where the interest rates at which we are borrowing Government money is now at 12 to 16 per cent in some banks. Allegedly, one of the loans was borrowed at 18 per cent, yet, we can borrow money globally at the cost of two per cent. We can actually reschedule Kenya's debts. All our debts can be rescheduled. We can go to the international money market and borrow at interest rates between two and four per cent, and pay out all our stock of debt, and make sure we begin afresh. These are the issues that I would want the Committee and this House to look at. Secondly, Mr. Deputy Speaker, Sir, there was a basic operating standard procedure on how we used our borrowed money. What did we do? The money would come, normally the rates at which we borrowed was at 30-70 per cent, as Sen. Eddie has said. Domestically, we would borrow at 30 per cent, because when you borrow domestically, borrowing in commercial banks becomes more expensive for the ordinary business person or Kenyan. The banks will also not want to lend to ordinary business people because of the cost of risk, the risk of where a commercial enterprise might borrow money and not deliver. So, commercial banks will prefer to trade in bills, bonds, and stocks. The Government is very comfortable with that because of what my brother, Sen. Eddy, and many other leaders here have talked about. When you go and negotiate with a commercial bank and you are borrowing a trillion shillings, and this commercial bank is actually giving you this money at a certain percentage, information and data gets to us where people in the Government will go and negotiate with some of these commercial banks, and they will even enable these commercial banks, after they have borrowed money for the Government, to allow the commercial bank to do overnight lending, where interest rates are undone. We never discussed these issues openly until recently when Sen. Okiya Omtatah started discussing them. Why do we borrow? Mr. Deputy Speaker, Sir, we borrow because sometimes our budget has gaps. Previously, the Kenyan Government position, if you look at when Prof. George Saitoti was the Minister for Finance, come up to President Kibaki and move on, you will realize The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
}