Africa is running on the wheels of debts according to the International Monetary Fund (IMF) with the new IMF boss calling for a change in Africa’s economies.
“Debt alone is not bad, it is bad when it goes for the wrong things, and when it goes with a speed that the economy cannot handle,” said Kristalina Georgieva, the current Managing Director at IMF.
Most African countries have been depending on massive borrowing from both the Eastern and Western powers, a move that has seen some of them sink deeper into debts.
Some African powers such as Kenya and Zimbabwe have a great percentage of their loans coming from China with Beijing given monopoly on major infrastructural projects such as the Standard Gauge Railway (SGR) in Kenya and the construction of parliament building in Zimbabwe.
“In some cases, we are concerned, in others, we see that investing is going to pay off over time,” said Georgieva, in a television interview with Bloomberg in Berlin, Germany.
In Kenya, the current public debt stands at 6.5 trillion shillings. The debt is expected to hit 7.2 trillion shillings by the time President Uhuru Kenyatta will be leaving office in 2022. The Senate voted to allow the National Treasury to borrow an additional 2.5 trillion shillings, a move that will see the debt rising to a ceiling of 9 trillion shillings.
“We do advise Kenya to be somewhat more cautious in building debt, but we have seen good macroeconomic policies in Kenya. Our program with the country, our engagement with the country, by and large, are just as positive,” the MD said.
According to Bloomberg, in Zambia, the government debt is set to increase to 92 percent of the GDP in 2019, and 96 percent in 2020.
Kenya’s Debt Crisis
The Senate in Kenya gave the government a green light to borrow at will as long as the debt does not go beyond 9 trillion shillings.
The go-ahead by the Senate means Kenyans will soon be in more trouble than ever before in terms of the ever ballooning public debt.
The government of Kenya has already borrowed 6.5 trillion shillings. The majority of the loans were set to mature in the next 12 months meaning Kenya is already looking at a complete economic lockdown.
With the permission from the Senate, the National Treasury, which has already admitted that it is broke, now has room to borrow 2.5 trillion shillings more to hit the ceiling set at 9 trillion shillings.
In the just-concluded National Census, Kenya has about 47,564,296 people. Dividing this number with the ceiling of 9 trillion shillings, every Kenyans will soon owe at least 189,218 shillings.