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{
    "id": 804956,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/804956/?format=api",
    "text_counter": 21,
    "type": "speech",
    "speaker_name": "Sen. Halake",
    "speaker_title": "",
    "speaker": {
        "id": 13184,
        "legal_name": "Abshiro Soka Halake",
        "slug": "abshiro-soka-halake"
    },
    "content": "Mr. Speaker, Sir, pursuant to Standing Order 46 (2) (a), I rise to make a Statement on an issue of general topical concern about our credit rating as a country. Even though this seems to be overtaken by headlines in the newspapers today about anxiety as Kenya’s debt load goes to Kshs5 trillion. That said, I will still go ahead and bring the attention of this House to the staggering debt burden that this country is going into. More importantly is the downgrading of our country by Moody’s. Mr. Speaker, Sir, I will explain a little bit about Moody’s, just for the sake of those of us who do not understand it and our students who are in the Public Gallery. It is a bond credit rating company that provides international financial research on bonds issued by commercial and government entities. The company ranks the creditworthiness of borrowers using a standardized ratings scale which measures expected investor loss in the event of default. The purpose of this rating is to provide investors with a simple system of gradation by which future relative creditworthiness of a country or institutions may be gauged. Our economy has been declining, even though in 2017 we had an estimation that expanded to 4.9 against 5.9 in the previous year. However, that has been attributed to the long electioneering period and other aspects such as the drought. According to the 2018 Economic Survey, the key drivers of all our economy - manufacturing, finance and agriculture - were all constrained. The financial and insurance sectors also declined in growth significantly over the said period and, therefore, dampened the overall growth of the economy. Mr. Speaker, Sir, a few months ago, the Moody's Investors Service downgraded three of our banks. I will not mention those banks because it is in the public domain. We do not want to penalize our banks when their credit rating has suffered as a result of our sovereign debt and ratings. Three of our banks were downgraded from a B1 rating to a B2 rating. This followed the downgrading of our country’s credit worthiness. Moody’s Sovereign press release asserted that the rating action was primarily driven by the potential deterioration of the Kenya Government’s credit profile as captured by the Moody’s recent rating action to place the B1 sovereign rating on review for downgrade. The Kenyan banks had high exposure to the Government debt, which is linked to their credit profile. Therefore, the banks were downgraded as a result of our sovereign debt burden and suffered a great loss. Mr. Speaker, Sir, in recent fiscal years, Kenya has been forced to borrow heavily to finance infrastructure, which is a good thing. However, the source of borrowing has been a great concern for economists. Instead of borrowing from multilateral sources, we have been borrowing from commercial sources and some bilateral sources such as China. This has really ramped up our debt. Just to give some figures; our foreign debt amounted to Kshs2.63 trillion by February this year. I think it is a bit more now. The domestic debt which is a bit more recent – up to last month – is Kshs2.448 trillion, making a total of Kshs5.011 trillion debt burden for the country. The electronic version of the Senate Hansard Report is for information purposes only. A certified version of this Report can be obtained from the Hansard Editor, Senate."
}