Wazua
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Kenya Economy Watch
Rank: Veteran Joined: 8/25/2012 Posts: 1,826
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Swenani wrote:Data and contextQuote:Many people, for instance, wonder why our debt, which is only 50 per cent of GDP, should be a concern, while many industrialised countries’ debt to GDP ratios are more than double ours, yet they are not in distress.
Take the US, with a debt equivalent to 107 per cent of GDP. The US spends only eight per cent of revenue to service this debt. We on the other hand are spending more than a third of our revenue to service debt which is less than half that of the US relative to income. What explains this? Quote:Sooner or later, our debt ladder will run out of rungs. You can take that to the bank. Depends on what color of shades one is wearing  Quote:Mueni is a mid-career flight attendant, while Mwikali is a young pilot. In effect, Mwikali’s future earning potential is much higher than Mueni’s. now lets complete the picture, Mueni has relatives and a banker who always steal from her, by getting the house loan she ensures that part of her pay goes straight to the house payment instead oh her relatives pockets, on future earning potential, it remains that, just potential who knows airbus might come up with a remote controlled passenger planes that do not need pilots.
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Rank: Member Joined: 6/15/2013 Posts: 301
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maka wrote:Swenani wrote:mulla wrote:Swenani wrote:Data and contextQuote:Many people, for instance, wonder why our debt, which is only 50 per cent of GDP, should be a concern, while many industrialised countries’ debt to GDP ratios are more than double ours, yet they are not in distress.
Take the US, with a debt equivalent to 107 per cent of GDP. The US spends only eight per cent of revenue to service this debt. We on the other hand are spending more than a third of our revenue to service debt which is less than half that of the US relative to income. What explains this? Quote:Sooner or later, our debt ladder will run out of rungs. You can take that to the bank. We have many naysayers who only want to hear negative news and bash the current government. Japan's debt to GDP is like 230%. Yet when it comes to Kenya our debt ratio to some people is road to a failing state  Some people want to compare our SGR to bullet trains yet ours was primarily designed to carry goods. Did you read the article ama ni kupayuka tu? @swenani.....Japans debt to GDP has been over 200% for a number of years and currently stands at >230%.....
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Rank: User Joined: 8/15/2013 Posts: 13,237 Location: Vacuum
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mulla wrote:maka wrote:Swenani wrote:mulla wrote:Swenani wrote:Data and contextQuote:Many people, for instance, wonder why our debt, which is only 50 per cent of GDP, should be a concern, while many industrialised countries’ debt to GDP ratios are more than double ours, yet they are not in distress.
Take the US, with a debt equivalent to 107 per cent of GDP. The US spends only eight per cent of revenue to service this debt. We on the other hand are spending more than a third of our revenue to service debt which is less than half that of the US relative to income. What explains this? Quote:Sooner or later, our debt ladder will run out of rungs. You can take that to the bank. We have many naysayers who only want to hear negative news and bash the current government. Japan's debt to GDP is like 230%. Yet when it comes to Kenya our debt ratio to some people is road to a failing state Some people want to compare our SGR to bullet trains yet ours was primarily designed to carry goods. Did you read the article ama ni kupayuka tu? @swenani.....Japans debt to GDP has been over 200% for a number of years and currently stands at >230%.....  1.Japan with a debt ratio of 230% spends 15% of it's revenue to service the debt every year. 2.USA with a debt ratio of 107% of GDP spends 8% 3.Kenya with a debt ratio of 42% spends over 33% to service the debt. 4.In 4 years, Kenya's debt has increased by 170% while the revenues have increased by 80% If Obiero did it, Who Am I?
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Rank: Elder Joined: 9/20/2015 Posts: 2,811 Location: Mombasa
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Swenani wrote:mulla wrote:maka wrote:Swenani wrote:mulla wrote:Swenani wrote:Data and contextQuote:Many people, for instance, wonder why our debt, which is only 50 per cent of GDP, should be a concern, while many industrialised countries’ debt to GDP ratios are more than double ours, yet they are not in distress.
Take the US, with a debt equivalent to 107 per cent of GDP. The US spends only eight per cent of revenue to service this debt. We on the other hand are spending more than a third of our revenue to service debt which is less than half that of the US relative to income. What explains this? Quote:Sooner or later, our debt ladder will run out of rungs. You can take that to the bank. We have many naysayers who only want to hear negative news and bash the current government. Japan's debt to GDP is like 230%. Yet when it comes to Kenya our debt ratio to some people is road to a failing state Some people want to compare our SGR to bullet trains yet ours was primarily designed to carry goods. Did you read the article ama ni kupayuka tu? @swenani.....Japans debt to GDP has been over 200% for a number of years and currently stands at >230%..... 1.Japan with a debt ratio of 230% spends 15% of it's revenue to service the debt every year. 2.USA with a debt ratio of 107% of GDP spends 8% 3.Kenya with a debt ratio of 42% spends over 33% to service the debt. 4.In 4 years, Kenya's debt has increased by 170% while the revenues have increased by 80% Like the rest of African countries Kenya is facing economic invasion from the west....Bretton Wood institutions are not with us...IMF and World Bank being the puppets of the western governments arm twisting African leaders. John 5:17 But Jesus replied, “My Father is always working, and so am I.”
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Rank: Veteran Joined: 11/14/2006 Posts: 1,311
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Swenani wrote:mulla wrote:maka wrote:Swenani wrote:mulla wrote:Swenani wrote:Data and contextQuote:Many people, for instance, wonder why our debt, which is only 50 per cent of GDP, should be a concern, while many industrialised countries’ debt to GDP ratios are more than double ours, yet they are not in distress.
Take the US, with a debt equivalent to 107 per cent of GDP. The US spends only eight per cent of revenue to service this debt. We on the other hand are spending more than a third of our revenue to service debt which is less than half that of the US relative to income. What explains this? Quote:Sooner or later, our debt ladder will run out of rungs. You can take that to the bank. We have many naysayers who only want to hear negative news and bash the current government. Japan's debt to GDP is like 230%. Yet when it comes to Kenya our debt ratio to some people is road to a failing state Some people want to compare our SGR to bullet trains yet ours was primarily designed to carry goods. Did you read the article ama ni kupayuka tu? @swenani.....Japans debt to GDP has been over 200% for a number of years and currently stands at >230%..... 1.Japan with a debt ratio of 230% spends 15% of it's revenue to service the debt every year. 2.USA with a debt ratio of 107% of GDP spends 8% 3.Kenya with a debt ratio of 42% spends over 33% to service the debt. 4.In 4 years, Kenya's debt has increased by 170% while the revenues have increased by 80% You should have gone further to say that the reason USA and Japan spends 8% and 15% respectively of their revenue to service debt is ..... They pay interest on the debt only. They don't pay the principal amounts. That's why their debt levels keep increasing.
Kenya is paying both principal and interest amounts and that is the reason it is paying 33% of its revenue. Secondly Kenya is paying its debt in a shorter period than US and China who just wait to pay the principal at end of the debt period.
US people are very worried about their debt levels. It keeps going up as they only pay interest and repay debts by borrowing more. I guess Japan could be in the same situation.
At some point Kenya could renegotiate with China and pay less for a longer period.
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Rank: Elder Joined: 9/20/2015 Posts: 2,811 Location: Mombasa
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Liv wrote:Swenani wrote:mulla wrote:maka wrote:Swenani wrote:mulla wrote:Swenani wrote:Data and contextQuote:Many people, for instance, wonder why our debt, which is only 50 per cent of GDP, should be a concern, while many industrialised countries’ debt to GDP ratios are more than double ours, yet they are not in distress.
Take the US, with a debt equivalent to 107 per cent of GDP. The US spends only eight per cent of revenue to service this debt. We on the other hand are spending more than a third of our revenue to service debt which is less than half that of the US relative to income. What explains this? Quote:Sooner or later, our debt ladder will run out of rungs. You can take that to the bank. We have many naysayers who only want to hear negative news and bash the current government. Japan's debt to GDP is like 230%. Yet when it comes to Kenya our debt ratio to some people is road to a failing state Some people want to compare our SGR to bullet trains yet ours was primarily designed to carry goods. Did you read the article ama ni kupayuka tu? @swenani.....Japans debt to GDP has been over 200% for a number of years and currently stands at >230%..... 1.Japan with a debt ratio of 230% spends 15% of it's revenue to service the debt every year. 2.USA with a debt ratio of 107% of GDP spends 8% 3.Kenya with a debt ratio of 42% spends over 33% to service the debt. 4.In 4 years, Kenya's debt has increased by 170% while the revenues have increased by 80% You should have gone further to say that the reason USA and Japan spends 8% and 15% respectively of their revenue to service debt is ..... They pay interest on the debt only. They don't pay the principal amounts. That's why their debt levels keep increasing.
Kenya is paying both principal and interest amounts and that is the reason it is paying 33% of its revenue. Secondly Kenya is paying its debt in a shorter period than US and China who just wait to pay the principal at end of the debt period.
US people are very worried about their debt levels. It keeps going up as they only pay interest and repay debts by borrowing more. I guess Japan could be in the same situation.
At some point Kenya could renegotiate with China and pay less for a longer period.
By Kenya negotiating with China for long term interest payment it could be toxic for our fragile economy. John 5:17 But Jesus replied, “My Father is always working, and so am I.”
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Rank: Veteran Joined: 11/14/2006 Posts: 1,311
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No individual or company or country can have significant development without debt. In 10-15 years time the SGR will be the best thing that happened to Kenya despite the borrowing. We need to borrow more until the SGR reaches the Uganda border. If we don't do it now it will be harder to do it in future. We need to borrow and complete the oil pipeline too as soon as possible. Such huge loans can only come from China.... No other country can do that now...and I guess even China will stop at some point in future.
We can always renegotiate with the lenders on the terms of payment to ensure the country is able to pay. The exchange risk is a big risk in our debt situation....but this could be mitigated through others factors like increased tourism and Oil production ....now that we are heading there (reducing forex for oil imports and increasing export forex). The risk of an increase on the amount dedicated to debt service either due to more loan or due to unfavorable exchange rates can be dealt with through loans renegotiation.
Isn't that what we do at individual levels when we borrow for projects and we encounter risks that make the loans repayment harder?
The sky is not falling surely.
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Rank: User Joined: 8/15/2013 Posts: 13,237 Location: Vacuum
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Liv wrote:Swenani wrote:mulla wrote:maka wrote:Swenani wrote:mulla wrote:Swenani wrote:Data and contextQuote:Many people, for instance, wonder why our debt, which is only 50 per cent of GDP, should be a concern, while many industrialised countries’ debt to GDP ratios are more than double ours, yet they are not in distress.
Take the US, with a debt equivalent to 107 per cent of GDP. The US spends only eight per cent of revenue to service this debt. We on the other hand are spending more than a third of our revenue to service debt which is less than half that of the US relative to income. What explains this? Quote:Sooner or later, our debt ladder will run out of rungs. You can take that to the bank. We have many naysayers who only want to hear negative news and bash the current government. Japan's debt to GDP is like 230%. Yet when it comes to Kenya our debt ratio to some people is road to a failing state Some people want to compare our SGR to bullet trains yet ours was primarily designed to carry goods. Did you read the article ama ni kupayuka tu? @swenani.....Japans debt to GDP has been over 200% for a number of years and currently stands at >230%..... 1.Japan with a debt ratio of 230% spends 15% of it's revenue to service the debt every year. 2.USA with a debt ratio of 107% of GDP spends 8% 3.Kenya with a debt ratio of 42% spends over 33% to service the debt. 4.In 4 years, Kenya's debt has increased by 170% while the revenues have increased by 80% You should have gone further to say that the reason USA and Japan spends 8% and 15% respectively of their revenue to service debt is ..... They pay interest on the debt only. They don't pay the principal amounts. That's why their debt levels keep increasing.
Kenya is paying both principal and interest amounts and that is the reason it is paying 33% of its revenue. Secondly Kenya is paying its debt in a shorter period than US and China who just wait to pay the principal at end of the debt period.
US people are very worried about their debt levels. It keeps going up as they only pay interest and repay debts by borrowing more. I guess Japan could be in the same situation.
At some point Kenya could renegotiate with China and pay less for a longer period.
Do you even believe what you wrote up there? I believe Kenya just like US and Japan use the same method of "refinancing debt" .Borrowing to pay off another debt and Kenya too only pays periodic interests and the principal is only paid when due at maturity/end of debt period If Obiero did it, Who Am I?
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Rank: Elder Joined: 12/4/2009 Posts: 10,702 Location: NAIROBI
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Liv wrote:Swenani wrote:mulla wrote:maka wrote:Swenani wrote:mulla wrote:Swenani wrote:Data and contextQuote:Many people, for instance, wonder why our debt, which is only 50 per cent of GDP, should be a concern, while many industrialised countries’ debt to GDP ratios are more than double ours, yet they are not in distress.
Take the US, with a debt equivalent to 107 per cent of GDP. The US spends only eight per cent of revenue to service this debt. We on the other hand are spending more than a third of our revenue to service debt which is less than half that of the US relative to income. What explains this? Quote:Sooner or later, our debt ladder will run out of rungs. You can take that to the bank. We have many naysayers who only want to hear negative news and bash the current government. Japan's debt to GDP is like 230%. Yet when it comes to Kenya our debt ratio to some people is road to a failing state Some people want to compare our SGR to bullet trains yet ours was primarily designed to carry goods. Did you read the article ama ni kupayuka tu? @swenani.....Japans debt to GDP has been over 200% for a number of years and currently stands at >230%..... 1.Japan with a debt ratio of 230% spends 15% of it's revenue to service the debt every year. 2.USA with a debt ratio of 107% of GDP spends 8% 3.Kenya with a debt ratio of 42% spends over 33% to service the debt. 4.In 4 years, Kenya's debt has increased by 170% while the revenues have increased by 80% You should have gone further to say that the reason USA and Japan spends 8% and 15% respectively of their revenue to service debt is ..... They pay interest on the debt only. They don't pay the principal amounts. That's why their debt levels keep increasing.
Kenya is paying both principal and interest amounts and that is the reason it is paying 33% of its revenue. Secondly Kenya is paying its debt in a shorter period than US and China who just wait to pay the principal at end of the debt period.
US people are very worried about their debt levels. It keeps going up as they only pay interest and repay debts by borrowing more. I guess Japan could be in the same situation.
At some point Kenya could renegotiate with China and pay less for a longer period.
The problem with Kenya's economy is as follows; --Our budget to GDP ratio is high. 2017/2018 budget at sh.2.62 trillion and GDP at 6.6 trillion Japan 2017 budget is at $1 trillion and GDP at $6 trillion. --Our budget deficit to GDP ratio is high. 2017/2018 budget deficit is at sh.900bn which is close to 14% of GDP. Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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Saddest thing in Kenya is all that borrowing is being wasted and eaten. If we were doing good things with borrowed funds, it would make sense. Skewed priorities. Business opportunities are like buses,there's always another one coming
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Rank: Veteran Joined: 11/14/2006 Posts: 1,311
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Swenani wrote:Liv wrote:Swenani wrote:mulla wrote:maka wrote:Swenani wrote:mulla wrote:Swenani wrote:Data and contextQuote:Many people, for instance, wonder why our debt, which is only 50 per cent of GDP, should be a concern, while many industrialised countries’ debt to GDP ratios are more than double ours, yet they are not in distress.
Take the US, with a debt equivalent to 107 per cent of GDP. The US spends only eight per cent of revenue to service this debt. We on the other hand are spending more than a third of our revenue to service debt which is less than half that of the US relative to income. What explains this? Quote:Sooner or later, our debt ladder will run out of rungs. You can take that to the bank. We have many naysayers who only want to hear negative news and bash the current government. Japan's debt to GDP is like 230%. Yet when it comes to Kenya our debt ratio to some people is road to a failing state Some people want to compare our SGR to bullet trains yet ours was primarily designed to carry goods. Did you read the article ama ni kupayuka tu? @swenani.....Japans debt to GDP has been over 200% for a number of years and currently stands at >230%..... 1.Japan with a debt ratio of 230% spends 15% of it's revenue to service the debt every year. 2.USA with a debt ratio of 107% of GDP spends 8% 3.Kenya with a debt ratio of 42% spends over 33% to service the debt. 4.In 4 years, Kenya's debt has increased by 170% while the revenues have increased by 80% You should have gone further to say that the reason USA and Japan spends 8% and 15% respectively of their revenue to service debt is ..... They pay interest on the debt only. They don't pay the principal amounts. That's why their debt levels keep increasing.
Kenya is paying both principal and interest amounts and that is the reason it is paying 33% of its revenue. Secondly Kenya is paying its debt in a shorter period than US and China who just wait to pay the principal at end of the debt period.
US people are very worried about their debt levels. It keeps going up as they only pay interest and repay debts by borrowing more. I guess Japan could be in the same situation.
At some point Kenya could renegotiate with China and pay less for a longer period.
Do you even believe what you wrote up there? I believe Kenya just like US and Japan use the same method of "refinancing debt" .Borrowing to pay off another debt and Kenya too only pays periodic interests and the principal is only paid when due at maturity/end of debt period
@Swenani, did you read the article?
This is an extract from the article you linked here....
" All US federal public debt is in dollar denominated government securities (bills and bonds) that the rest of the world wants to hold.
They only pay interest on it. Our foreign debt is predominantly bank debt. We pay both interest and principal. Second, as long as the US dollar is the world’s reserve currency, the US can print money to pay its debt. Because these dollars circulate abroad, they do not fuel inflation in the US."
So I ask you like you asked someone here.....Did you read it?....ama ni kupayuka tu hapa?
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Rank: Veteran Joined: 11/14/2006 Posts: 1,311
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Ericsson wrote:Liv wrote:Swenani wrote:mulla wrote:maka wrote:Swenani wrote:mulla wrote:Swenani wrote:Data and contextQuote:Many people, for instance, wonder why our debt, which is only 50 per cent of GDP, should be a concern, while many industrialised countries’ debt to GDP ratios are more than double ours, yet they are not in distress.
Take the US, with a debt equivalent to 107 per cent of GDP. The US spends only eight per cent of revenue to service this debt. We on the other hand are spending more than a third of our revenue to service debt which is less than half that of the US relative to income. What explains this? Quote:Sooner or later, our debt ladder will run out of rungs. You can take that to the bank. We have many naysayers who only want to hear negative news and bash the current government. Japan's debt to GDP is like 230%. Yet when it comes to Kenya our debt ratio to some people is road to a failing state Some people want to compare our SGR to bullet trains yet ours was primarily designed to carry goods. Did you read the article ama ni kupayuka tu? @swenani.....Japans debt to GDP has been over 200% for a number of years and currently stands at >230%..... 1.Japan with a debt ratio of 230% spends 15% of it's revenue to service the debt every year. 2.USA with a debt ratio of 107% of GDP spends 8% 3.Kenya with a debt ratio of 42% spends over 33% to service the debt. 4.In 4 years, Kenya's debt has increased by 170% while the revenues have increased by 80% You should have gone further to say that the reason USA and Japan spends 8% and 15% respectively of their revenue to service debt is ..... They pay interest on the debt only. They don't pay the principal amounts. That's why their debt levels keep increasing.
Kenya is paying both principal and interest amounts and that is the reason it is paying 33% of its revenue. Secondly Kenya is paying its debt in a shorter period than US and China who just wait to pay the principal at end of the debt period.
US people are very worried about their debt levels. It keeps going up as they only pay interest and repay debts by borrowing more. I guess Japan could be in the same situation.
At some point Kenya could renegotiate with China and pay less for a longer period.
The problem with Kenya's economy is as follows; --Our budget to GDP ratio is high. 2017/2018 budget at sh.2.62 trillion and GDP at 6.6 trillion Japan 2017 budget is at $1 trillion and GDP at $6 trillion. --Our budget deficit to GDP ratio is high. 2017/2018 budget deficit is at sh.900bn which is close to 14% of GDP.
What is the problem with that? Kenya is a growing economy while Japan is a mature economy. You don't expect to spend the same proportion of Capex in a growing stage of a company as you would spend when it is mature.
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Rank: Veteran Joined: 11/14/2006 Posts: 1,311
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KulaRaha wrote:Saddest thing in Kenya is all that borrowing is being wasted and eaten.
If we were doing good things with borrowed funds, it would make sense.
Skewed priorities.
Surely we can't say all the borrowing is wasted and eaten.....we are getting real assets like SGR, Roads and the Pipeline ...though their costs are inflated due to corruption.
However, I guess most of the corruption cash is spent in the country at one time creating demand for goods and services. I would say most of the borrowed money still gets into the country somehow. This still generates GDP growth.
NB: I am deeply against corruption.
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Rank: Elder Joined: 12/4/2009 Posts: 10,702 Location: NAIROBI
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Liv wrote:KulaRaha wrote:Saddest thing in Kenya is all that borrowing is being wasted and eaten.
If we were doing good things with borrowed funds, it would make sense.
Skewed priorities.
Surely we can't say all the borrowing is wasted and eaten.....we are getting real assets like SGR, Roads and the Pipeline ...though their costs are inflated due to corruption.
However, I guess most of the corruption cash is spent in the country at one time creating demand for goods and services. I would say most of the borrowed money still gets into the country somehow. This still generates GDP growth.
NB: I am deeply against corruption. Roads are good. SGR was a wonderful idea and would have been best if rolling stock was tendered and we get the best provider. Imagine if a company for example Siemens supplied the locomotive and wagons the type of railway line we would be having Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 12/7/2012 Posts: 11,908
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Under Jubilee, corruption has increased compared to Kibaki regime. That is the elephant in the room. In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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Rank: Member Joined: 9/11/2014 Posts: 228 Location: Nairobi
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Angelica _ann wrote:Under Jubilee, corruption has increased compared to Kibaki regime. That is the elephant in the room. Agreed, @Angelica _ann. If corruption was not part of the equation, the rehabilitation of the narrow gauge railroad would have made more economic sense.
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Rank: User Joined: 8/15/2013 Posts: 13,237 Location: Vacuum
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Liv wrote:Swenani wrote:Liv wrote:Swenani wrote:mulla wrote:maka wrote:Swenani wrote:mulla wrote:Swenani wrote:Data and contextQuote:Many people, for instance, wonder why our debt, which is only 50 per cent of GDP, should be a concern, while many industrialised countries’ debt to GDP ratios are more than double ours, yet they are not in distress.
Take the US, with a debt equivalent to 107 per cent of GDP. The US spends only eight per cent of revenue to service this debt. We on the other hand are spending more than a third of our revenue to service debt which is less than half that of the US relative to income. What explains this? Quote:Sooner or later, our debt ladder will run out of rungs. You can take that to the bank. We have many naysayers who only want to hear negative news and bash the current government. Japan's debt to GDP is like 230%. Yet when it comes to Kenya our debt ratio to some people is road to a failing state Some people want to compare our SGR to bullet trains yet ours was primarily designed to carry goods. Did you read the article ama ni kupayuka tu? @swenani.....Japans debt to GDP has been over 200% for a number of years and currently stands at >230%..... 1.Japan with a debt ratio of 230% spends 15% of it's revenue to service the debt every year. 2.USA with a debt ratio of 107% of GDP spends 8% 3.Kenya with a debt ratio of 42% spends over 33% to service the debt. 4.In 4 years, Kenya's debt has increased by 170% while the revenues have increased by 80% You should have gone further to say that the reason USA and Japan spends 8% and 15% respectively of their revenue to service debt is ..... They pay interest on the debt only. They don't pay the principal amounts. That's why their debt levels keep increasing.
Kenya is paying both principal and interest amounts and that is the reason it is paying 33% of its revenue. Secondly Kenya is paying its debt in a shorter period than US and China who just wait to pay the principal at end of the debt period.
US people are very worried about their debt levels. It keeps going up as they only pay interest and repay debts by borrowing more. I guess Japan could be in the same situation.
At some point Kenya could renegotiate with China and pay less for a longer period.
Do you even believe what you wrote up there? I believe Kenya just like US and Japan use the same method of "refinancing debt" .Borrowing to pay off another debt and Kenya too only pays periodic interests and the principal is only paid when due at maturity/end of debt period
@Swenani, did you read the article?
This is an extract from the article you linked here....
" All US federal public debt is in dollar denominated government securities (bills and bonds) that the rest of the world wants to hold.
They only pay interest on it. Our foreign debt is predominantly bank debt. We pay both interest and principal. Second, as long as the US dollar is the world’s reserve currency, the US can print money to pay its debt. Because these dollars circulate abroad, they do not fuel inflation in the US."
So I ask you like you asked someone here.....Did you read it?....ama ni kupayuka tu hapa?
Sijui mimi ndio sijui maana ya principal and interestBut still the fraction of commercial loan which requires principal and interest payments is negligible Currently, Kenya's foreign debt composition is as below 1.Multilateral-42% 2. Bilateral-32% 3. Commercial-26%(This includes the likes of Eurobond where you only pay interest and principal at maturity) Domestic debt is as below 1. T bonds-69.3% 2. T bills- 26.4% 3. Banks-4.3% Quote:The third and most significant is the change in structure of the debt. You may recall that $605 million (Sh62.7 billion) of the Eurobond proceeds was used to pay-off a “syndicated” bank loan.
Syndication means co-financing of a loan by many banks principally to reduce the risk exposure to a single borrower. These loans are similar to bonds in structure, that is, the borrower pays only interest during the tenure of the loan and the full principal in a single payment at maturity. Even assuming all our debts are repaid together with interest and principal don't you therefore think that data and context matters? If Obiero did it, Who Am I?
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Rank: Member Joined: 6/15/2013 Posts: 301
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iris wrote:Angelica _ann wrote:Under Jubilee, corruption has increased compared to Kibaki regime. That is the elephant in the room. Agreed, @Angelica _ann. If corruption was not part of the equation, the rehabilitation of the narrow gauge railroad would have made more economic sense. A valid argument on the other hand is that our GDP growth,borrowing and budget is much higher as compared to the Kibaki and Moi regime. What this means is that, yes, the quantity of money being embezzled is much higher, but that is because there is more money circulating in government. Plus in this regime corruption scandals are more in the open,whereas before there was a lot going on under the carpet that was not filtering through to the public, especially in the Moi regime, so perception of corruption under Jubilee seems highest. An accurate(but controversial) way of comparing levels of corruption would be by percentages,example, figures embezzled vs GDP for the country. Plus on another note our SGR is more superior to Ethiopias, ours can pull heavier loads.
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Rank: Veteran Joined: 11/14/2006 Posts: 1,311
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The SGR is being financed by Exim bank China. This is a bank loan which requires payment of both principal and interest together.
Our debt service proportion to revenue are high due to such decisions.
However it is hard to get multilateral or bilateral loans to finance projects like SGR and the pipelines. These require huge amounts of cash and few countries or banks would be willing and able to fund. So we are forced to get loans from the likes of exim bank. I believe we can renegotiate the payment terms later, but let's have these projects completed as quickly as possible.
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Rank: Veteran Joined: 11/14/2006 Posts: 1,311
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Angelica _ann wrote:Under Jubilee, corruption has increased compared to Kibaki regime. That is the elephant in the room. So what did you want to conclude in regard to the discussion here about debt service levels?
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