Government to Float New Kes.150 Billion Bond in June
BUSINESS

Government to Float New Kes.150 Billion Bond in June

Feb 21, 2020 | Jimmie Kariuki

The Treasury is expected to float a new Bond worth Kes. 150 Billion in the next four months, News Today has learnt.

According to Housing, Transport and Infrastructure PS Prof. Paul Maringa, the Treasury will float the bond which is expected to go into infrastructural development and road networks rehabilitation.

Speaking before the Transport and Infrastructure Committee chaired by Pokot South MP David Pkosing, the PS revealed plans to use the bond to re-carpet road networks all over the country between June and September, with the remainder expected to settle pending bills within the ministry.

Speaking during the parliamentary committee meeting, PS Maringa told the committee that the roads sub-sector in the Infrastructure Docket requires Kes. 650 Billion in order to clear all outstanding commitments on ongoing projects within the country.

The government, in the new 2020/2021 Budget Policy Statement allowed the Kenya Roads Board, KRB to seek for loans from commercial lenders; loans which will be then leveraged by the annual budget appropriations into the Roads Board.

The Budget Policy Statement also seeks to collapse the Kenya Rural Roads Authority, KeRRA, Kenya Urban Roads Authority, KURA and Kenya National Highways Authority, KeNHA and fold them under the Kenya Roads Board, KRB from where the annual monies will be deposited by the Treasury.

The PS revealed that these plans were put into place to protect taxpayers’ money and to ensure efficiency and accountability in the use of taxpayer money.

The plan is also expected to be activated so that the annual budgets for the three roads companies can go into the repaying of the roads bond in a period of the next 10 years.

The bond, if granted will be the country’s first ever roads bond.

“This implies that it will take over 10 years to pay off the current outstanding commitment assuming no new projects are brought on board.”

Mr. Maringa said during the committee hearing.

The committee, when grilling the PS also demanded to know why the Budget had been cut from Kes. 65 Billion to 51.8 Billion for the next financial year starting June, 2020.

“Somebody at the Treasury is being mischievous for reducing the budget simply because KRB has power to float a roads bond. If you don’t ensure that the allocations of Kes. 65 Billion is ring-fenced for 10 years, KRB will be mortgaged because it will not have cash to service the bonds.”

Mr. Pkosing said during the hearing.

However, these news were not well received by Economist Mohamed Wehliye, who faulted the government’s thinking at a time when things are tight for Kenyans.

Wehliye, who is an advisor with the Saudi Arabian Monetary Authority, SEMA stated that the government ought to have cut on debt especially in the infrastructure and energy sectors that consume a large chunk of taxpayers’ money.

 

Wehliye termed the decision by the government as reckless and ‘Madness’, disagreeing with the government’s decision to float a bond at a time when Kenyans are calling for austerity measures to contain the mushrooming debt.

Wehliye likened the government’s decision to use debt to achieve infrastructure targets while pushing for austerity measures with that of adding more luggage to an already worn and broken down truck instead of getting a rescue team that will help throw away the luggage in the truck and help it stop within the shortest time.

Wehliye cautioned that using debt to assist in implementation of austerity measures was wrong and dangerous for a country that is already in a deep debt hole.

“Madness! H.E needs to re-boot high spending infrastructure ministry & energy ministry ASAP. Get rescue team that throws out quickly the luggage in the moving truck to enable it slow & stop in the shortest time possible. Debt junkies cannot be expected to assist in the austerity measures.”

Wehliye said.

The decision to float a bond barely 5 years since the Jubilee Administration announced having done over 6,000 kilometres of roads by 2018 using just a quarter of the resources needed is questionable in itself.

A report by the Business Daily, in 2017 revealed that cement consumption in the country had dipped from 6.3 Million tonnes in 2016 to 5.8 Million in 2017, making it impossible for the government to have built the said roads, or have hurt the country’s economy by importing the bags of cement.

 

Got a Hot Story or Tip you’d want us to follow through? Got a Review or Comment? Reach us via ntips.kenya@gmail.com or WhatsApp +254795887400


0

PLEASE SUBSCRIBE TO WATCH FREE COMEDY VIDEOS.