Ruto Borrows KSh. 238B Just to Pay Another Loan

11 mins read

President William Ruto has been complaining for the last one year in office that the only reason he and his government cannot do anything to help Kenyans reduce the cost of living and get real developments moving on the ground apart from endless announcements was because President Uhuru put Kenya in a big foreign loan squeeze and debts.

Ruto and his CS’s like the Mudavadis and others have been promising Kenyans that they are getting rid of the loans and that is why there is no money for development in Kenya.

So what is Ruto’s answer right now for that alleged predicament of “Uhuru Loans”? Go out and borrow hundreds of billions from everywhere. Just the idea of borrowing Sh. 238 billion and it all goes to pay the Eurobond and not a penny of that goes for any development in Kenya is truly sickening to the Kenyan public who will have to put up with another round of no development because Ruto is paying loans and borrowing more every day.

The way the Eurobonds are structured by the smart lenders is that the borrower has to pay the whole amount in one shot.

The old Eurobond lenders will get their whole close to Sh. 400 billion of loans and they give Ruto and his government another loan to pay the old one and the new one is payable in a few years in full and at that time Kenya will borrow a new Sh. 238 billion to pay for this one. It looks like money laundering by the lenders but with foolish and visionless governments that is not the problem for the lenders.

Imagine regular banks and their customers behaving like this. They give you KSh. 10 million loans for a few years. You do nothing productive with the loan so you cannot pay it and then the same bank gives you another Sh. 10 million this time to pay the old loan. That is a road to nowhere and that is where William Ruto is taking Kenyans.

In a public statement from the Treasury, February 13, 2024, the Treasury boss, Njuguna Ndung’u announced that Kenya has successfully issued a new Eurobond worth $1.5 billion (Sh238 billion )to pay back the inaugural one due on June 24. 

In a statement, the National Treasury says the new loan divided in three installments has a weight average life of six years and is expected to mature in 2031.

The bond is priced at 10.37 per cent, the highest rate Kenya has ever paid since it issued the first one in 2014. 

“The proceeds of the 2023 Eurobonds will fund the offer to buy Kenya’s existing $2 billion Eurobonds due in 2024, pending demand in the tender offer whose results are expected February 15,” the exchequer says. 

One big thing here is that this Sh. 238 billion has the highest interest 10.37% much bigger than the old one Ruto is paying. So Kenya is getting a loan with a higher interest loan to pay another loan which had a better interest rate for Kenya. That means Kenyans will be paying more than Sh. 24 billion just on interest alone for this new loan. How brilliant.

The sad part about all this loan mania by Ruto is that Kenyans will not see a single penny from this loan. What a wonderful way to run a country. Ruto has been yelling at Kenyans and stating that he will not borrow any money so that Kenyan money can be used for development. Now Kenyans have to pay a loan and interest for years on a loan that will never even touch Kenyan land as it goes straight to cover the other loan.

The same Ruto just borrowed 1 billion dollars from China just a few weeks ago. At the exchange rate that is close to Sh. 160 billion. Ruto did not bother to tell Kenyans the interest rate the taxpayers would be paying on this loan from China.

According to the Pan African Chamber of Commerce, at the moment Kenya already owes China $ 8 billion in loans, and with the new one that adds up to $ 9 billion Kenya owes to just one country even as Ruto collects loans from everywhere else. The Kenya loan to China alone adds up to Sh. 1.4 trillion Kenya loan to China.

Does anybody wonder why Kenyan foreign debts today is more than Sh. 10 trillion and at the rate Ruto is borrowing Kenya could be having a foreign debt of Sh. 20 trillion by 2027 and the country can then just go bankrupt and everyone’s life will go to hell in a hurry.

  All these new loans are on top of trillions already borrowed by Ruto since he took office with the biggest of those loans being the Sh. 1.8 trillion coming from the World Bank in November 2023. President Ruto defended the new Sh1.8 trillion financing pledged by the World Bank and Sh687 billion IMF loan after meeting World Bank President in Germany.

William Ruto begging for more loans from Word Bank President Ajaypal Singh Banga

In a statement after meeting World Bank President Ajaypal Singh Banga on Monday, November 20, President Ruto thanked the international lender for the support.

The two met on the sidelines of the G20 Compact with Africa Conference on Economic Cooperation, Promotion of Private Investment held in Berlin, Germany.

“Kenya is indebted to the financial and technical support that the World Bank — and the International Monetary Fund — continue to extend to us. We are especially grateful to the Institutions for their latest assistance — Sh1.8 Trillion and Sh687 Billion, respectively,” President Ruto said.

The head of state added that the financing would help “rebuild our buffers, tame inflation and debt vulnerabilities. This support will help Kenya withstand shocks, accelerate the Bottom-Up Economic Transformation Agenda and advance our long-term, robust and inclusive growth.”

In a press release on Monday, November 20, the World Bank said the Sh1.8 trillion ($12 billion) financial package awaits World Bank executive directors’ approval and will depend on the bank’s lending capacity.

“So, subject to the World Bank Executive Directors approval of new operations, and to factors which may affect the Bank’s lending capacity, this implies a total financial package of $12 billion over the three years,” the statement read. Currently, Kenya accesses approximately $2 billion (Sh305 billion) in concessional financing each year.

Kenya is currently grappling with a heavy debt load and pressure on its foreign currency reserves.

As Ruto’s boys cheered him for collecting more loans, on the other hand many Kenyans criticized the financing, saying it leads to more debt and contradicts the government’s claims that the previous regime sank Kenya in a debt hole.

Kenyans need to ask themselves one question and that is where the heck is William Ruto taking their country if not into an unredeemable financial and economic hole never seem before in the nation. There is no more Bottoms UP in Ruto’s economic plans if he has anything like that because the bottom has fallen into a stinking hole and it is hard to get up from there.

Now Kenyans live in a world of endless taxes, housing levy, health levy and all that while his CSs spend all there taking selfies, videos, and pictures for publicity while laughing at Kenyans who they pretty much think are too stupid to see the predicament they are in and will just reelect Ruto. The big political moves in KK is not how to address the concerns of Kenyans but how Gachagua will be the president in 2032. Will Kenya still be there in 2032 with the kind of government we see today in the country?

And by the way are CAS’s Ruto appointees who are legally barred from those offices, like Millicent Omanga being paid Sh. 700,000.00 a month by State House? Maybe the president can come clear on that so Kenyans know they are not funding illegal office holders in the country. That is not hard for Ruto to do. Is it?

Adongo Ogony is a Human Rights Activist and a Writer who lives in Toronto, Canada

Leave a Reply

Your email address will not be published.

Previous Story

President Ruto Throws Weight Behind Raila for AU Commission Chair Job

Next Story

Ruto: Construction Of Stalled Mau Mau Roads To Resume

Latest from Blog