A world is supported by four things “… the learning of the wise, the justice of the great, the prayers of the righteous and the valor of the brave.." -Frank Herbert
@paulinenjoroge
Notice the difference on foreign currency debt creation? We had US$8bn of debt and $6bn of Fx Reserves when Kibaki left. Uhuru left $38bn of debt and just $7bn of FX Reserves. We borrowed $30bn dollars and only left $1bn to pay it down. Worse Exports remained at $6bn while
Cement must be the only commodity that sells cheaper today than 15 years ago, despite the inflation impact!
Can industry experts break that down? It doesn’t make economic sense
@DavidNdii
We have sacrificed building FX reserves ( and boosting national savings) on a preference of a stronger local unit. Monetary Policy had also been kept at a restrictive level for long periods with high positive real interest rates, which tends to support holding speculative
@ahmednasirlaw
Totally derogatory especially given the animal choice and its anathema to certain demographics. The case of the delay was a political one and you have chosen to tribalise it. Feeding on prejudice and spreading hate because your candidate lost is just banal
The most underrated money transfer service in Kenya is Pesalink. It has been a true savior in these Covid months. Mpesa is great for small amounts, but...that's it. Some bank also offers free Pesalink transfers. They should have morphed it to something bigger by now
@IPSL_Kenya
@denismaina_
@RkrPeti
@paulinenjoroge
There are no solutions to debt misadventure- just consequences.
It’s very amusing to see folks thinking there will be a magic wand solution.
Forget what politicians say or do- we are in for the long haul and it will take over 15 years to fix this mess. And that’s only if we
@MigunaMiguna
@Swat_edu001
@RobertAlai
If Kenyans had that attitude, we would have less thievery. Its not the amount that's important, it's the culture we allow to thrive. Would you ignore your kids for stealing a small amount, or would you take that chance to teach accountability? I support his course of action
@BillowKerrow
This is a terrible example - why would you use victims to depict shame? You posit as if the women willingly got assaulted and only those who fight back are worthy of celebrating? How about the shame should be on the soldiers?
This is tone deaf and very patriarchal at the point
@Jamin_sigana
@RkrPeti
@denismaina_
@paulinenjoroge
This government doesn't belong to KK. Their economic plan is on hold while we go through the fiscal adjustment. If they fail or slibe back to fiscal loosening and printing cash for subsidies , you'll look back to this period & realise things were much better.
Our currency moved
We will need to realize soon that we need
@CBKKenya
to print us out of this
#COVId19
crisis. Our economic models aren't meant to deal with a hard-stop braking-
The social order will not survive, millions will be rendered jobless.
Forget austerity
@BaloziYatani
@StateHouseKenya
@mwandokamau
@moneyacademyKE
China are facing major defaults from so many countries... right now focus is to get paid what's owed first then they can see about other loans.
And anyway we should just fund that from the railway development levy and stop borrowing in foreign currency
-
@KenyaAirways
was insolvent to the tune of 60bn in 2017
-A painful act of self-sacrifice by Banks was brokered by GoK
-Banks could have chosen liquidation& moved on Instead they were ALSO asked to inject NEW loans for OPEX support.
-Their magnanimity is being spat on right now
@smithoates
@sRic054321
@jaimetoons
@witchylunar_tic
Because after spending a lifetime being profiled - it's already offensive! You need to empathize to understand.
People are jaded and defensive and that approach can not end well - because no matter how you cut or dice, the stenciled message WAS the problem!
@RkrPeti
@paulinenjoroge
So how do you think dollar be would be paid ? For example the SGR debt had a principal holiday of 5-10 years - before 2020, our annual debt service in dollars was below $1bn. In 2022/23 it jumped to $3.4bn, then $5.1bn in 2023/24 due to the Eurobond in June 2024. Uhuru procured
@MutahiNgunyi
The revolution we need is mental... Run prudent budgets without excessive debt and avoid self-imposed economic crises. It doesn't matter who we elect if we don't get the economics right.
At some point , we will need to consider a constitutional amendment to hard-code fiscal deficit caps to the constitution.
It will serve no purpose to go through austerity only for another profligate administration to come mess things up again in the future . We need to build for
@C_Roiginson
@HonMoses_Kuria
Why not? Rent can make up to 40% of your income - if income is used elsewhere it will turbo-charge consumption of goods or boost national savings. Once you remove stress ya nyumba you only need to figure what to eat
@BillowKerrow
You left out an obvious metric to complete your equation - what was the comparative exchange rate ? Makes the post not very helpful and plainly sensational
@babalao__
@millardayo
Russia and Saudia Arabia are the ones leading supply cuts to boost prices. Plus the OPEC cartel is still limiting production via agreed quotas. Brent crude hit $90 yesterday (that's about 10% higher in barely a month)- so fuel prices will be higher again next month
@AlilaArjen
@paulinenjoroge
It’s not a blame game - just pointing at the genesis of our Fx challenges. If we don’t figure the root cause, we will be bound to repeat the same.
We are fixing the mess - but it’s still an IMF prescription and we will only know if we learnt any lessons once we exit their
@kitekimichael
@OleItumbi
@RailaOdinga
Let's take the maths further.. This is allowable for tax so you save the PAYE portion and you only use 1,050.
Your employer must match your contribution so double that to 720k.
Assuming a 10% compounded annual return 720k*1.1^20 =4,843,800
That's a pretty good deal. I would take
@ahmednasirlaw
@KagutaMuseveni
He suggests the inflation rate should set the base interest rate for Islamic products ..to retain purchasing power. Very sound arguments - there can not be usury on that.
But if it goes too high above the inflation rate... then iko shida
Oil has now dropped over $36 dollars since its Oct peak with no corresponding change in Kenya pump prices
@WehliyeMohamed
@energy_ke
. Diesel dropped by a few cents in the Dec review. Hujuma?
@RkrPeti
@denismaina_
@paulinenjoroge
You need to distinguish between debt increase via currency revaluation and also the natural increase due to service costs ( 1 trillion). Even if you balance you tax to expenses- this two will keep adding to the debt.
The first mark to manage debt is to run a primary budget
@denismaina_
@RkrPeti
@paulinenjoroge
IMF don’t come to well run countries- and once people get to fiscal indiscipline, they never stop. Ghana is on the 17th cycle , ditto Argentina.
It’s very easy to exit an IMF program - but once out, people tend to get back in very quickly.
Why is that ? Because we have 5 year
@ekasoma
@kipmurkomen
If Tz was giving reciprocal rights, then this would make sense. TZ has the same landing rights for passengers in Kenya as KQ gets in Tz. Would Tz agree for KQ to take passengers directly from Dar to the rest of the world-I dont think so? This is what TZ is asking for - to use
@Uzo_hills
@RAbdiAnalyst
Not really... Somalis were Muslim for over 1000 years before then. Religion isn't the problem. The cultural takeover is quite new and it's not only there- go and check photos from the 60s and earlier and you'll see so many different and colourful societies all over.
@fchuifall
@DavidNdii
Inflation is running at 9%, Kenya shilling is much lower & IPP are paid in dollars, thermal generation uses diesel which is imported (hydro suffered the drought). How is it rational to expect power cost to remain unchanged?
Kibaki removed foreign debt from gov't budgeting & grew revenues at a brisk 14% annually. Debt/GDP fell from 74% when Moi left to 40%(lower if you factor the rebase that Jubilee did to capture the telco sector).
The 90's were terrible economically after the mega Goldenberg heist
Many compare Kenya’s Economy under Presidents Daniel Arap Moi & Mwai Kibaki and associate former with Corruption & Stagnation & later with growth ... But they ignore Two Facts: All Companies built & grew under Kibaki are all DEAD! All Schools, Universities & Stadiums were by Moi.
@wadong3
You can never default on your domestic debt - unless you deliberately chose to - this is because the government has ability to print as much currency as they need (through fiscal deficits or central banks buying the debt). This is however inflationary and leads to loss of
@IkeOjuok
@ahmednasirlaw
I respect and admire the SC but he needs to be conscious of messages that are laden & can be used to fuel already-existing prejudice. He could have used Cow or sheep given that's the mainstay of Central. But also the blockage was instigated by the majority leader, a Northeastern
Kenya fiscal deficit woes always emanate from over optimstic forecasts that then crystallize to excessive spending when revenue targets are missed. Today's policy statement has followed the same thread.
@WehliyeMohamed
@alykhansatchu
via
@TheStarKenya
@IkeOjuok
@ahmednasirlaw
Again political - and I fully agree with the sentiment. It is a constitutional requirement and should not be at the whim of the presidency on when to gazette- could be grounds for impeachment But to convey the message with tribal & religious deragatory innuendo is not right.
NEXT the
@NSE_PLC
Derivatives Market is going live today. On the Launch will be a number of Single stocks & the NSE 25 index Futures. Here’s to a new great horizon in the Ke 🇰🇪 Capital & Financial markets.
@maronga_abiuth
@kipmurkomen
1. Shipping companies charge you daily demurrage running into tens of thousands of dollars. So they aren't just waiting, they are being paid very handsomely to wait.
The pain will be borne by importers.
3 weeks in African markets.
Zambian Kwacha and Kenya Shilling move from the worst pairs to the best performing currencies. They swapped places with the Nigerian Naira, which was allowed to float freely.
Africa is not for the fainthearted ...
Charts courtesy of Bloomberg
@eb05fd08981a40e
@njorogep
@raziakkhan
Shouldnt it be a simple matter of enforcing the law? Kenya has a minimum wage that's 2.5 times that amount. You cant get away with that... A simple visit to any labour office will fix that employer. Let's be factual in our criticism!
@kong8900
@Jamin_sigana
@RkrPeti
@denismaina_
@paulinenjoroge
1. If you set a deficit cap then that's the hard target you should follow, we budgeted for lower spending on interest rates servicing than we have seen - I would think we should automatically see a supplementary budget cutting spending to push items to the next year's s budget.
KESUGX cross rate 5 year chart (Bloomberg)
Ugx has gained >31% (c. 7% annualized) in that period
It evidences adherence to free-markets (market determined Fx and interest rates ) pays higher dividends in the long run - despite the offset being slightly higher volatility
When the dust settles on our debt fiasco, the biggest responsibility will lie with parliament
We changed the constitution to have the check excesses by the executive- they instead went to sleep and rubber stamped every ask by Treasury.
Nothing new..Rotich's budget have been a PR job. How do you get a budget done & approved in June & a couple of months later it is unworkable. It's been so past 3 years....It reflects badly on National Assembly which approves it as a ritual.
KQ will need KES 30-50bn in bailouts per year to remain in operation. For that cost we can start a new airline from scratch!
Just send it to administration, pay off your guaranteed debt & start a new airline. You could literally lease the same aircrafts for a huge discount!
You can't turn around an airline steeped in debt & inefficiency. South Africa gave up on SAA! We shall come to that logical conclusion sooner or later.
Things were tough pre-covid, the airline industry will take 4 years to recover. Can we afford to prop KQ that long?
@MihrThakar
Building oncology centers, while a great idea, is still diagnostic at best.
The conversation we aught to have is how greed has allowed us to decimate our forests, poison our food, pollute our environment while we bemoan & do nothing.
Cancer is but a consequence
#RIPLaboso
Seriously! What the hell is this?
Whatever you think of
#Catalonia
I think we can all agree that this kind of violence is completely unprovoked and unjustified
@thatrichdriver
@XivTroy
@sir_greg_t
That tweet is gender neutral. Even the guy needs to keep growing otherwise his self-esteem will turn into a monster. Support while also pushing yourself.. Grow each other!
Kenya Is Poised to Become the ‘Singapore of Africa’
Not only is Africa rising, but East Africa is too. And Kenya is likely to be the easiest and most predictable way to bet on it.
@WehliyeMohamed
@MwangoCapital
Agreed 100%!
We had a defacto managed pegged, which didn't reflect our 5-6% annual current account deficits. Without borrowing to replenish FX reserves, we would have depreciated by anywhere between 5-10% per year in line with our twin significant deficits (fiscal deficit was
Agreed with all of this and I’d add that it was external borrowing which kept the Kenya shilling strong. The rise in external debt each year was similar to the size of the current account deficit. This allowed the KES to remain stable when inflation implied it should weaken
The CBK MPC have done their part
-CBR cut 1% to 7.25%
-CRR cut by 1% (will immediately inject 40+bn to Bank's liquidity)
-Also commits do to more if necessary
We needed bold & they excelled. Well done!
Now over to fiscal policy. .. !
11. In summary
1. Make a huge stimulus program targeting payroll replacement, nutrition, rent, taxes etc
2. Fund via QE (print)
3. Cut CRR and CBR
4. Severe import restrictions to allow capital markets remain open and force local consumption
5. Keep at it for as long as needed!
For many years it has been cheaper ro jump into a long haul flight, go spend a week in an exotic location and the total cost would still be cheaper than staying in a comparatively lower-rated hotel in Kenya.
We are our own worst enemies!
Tourism CS Najib Balala: The problem I have with our tourism industry is that we have overpriced ourselves. Even the people who come to Kenya, come once in a lifetime because it is very expensive. We need to make it affordable even for Kenyans
#DayBreak
w/
@TrevorOmbija
Is Fuliza cannibalising Mpesa? 50% of the guys I have tried to send cash to in the last few weeks have requested I hold back & use other means as they are in O/D. The velocity of money in the platform must be taking a hit
The reason why I was very vocal agst the fuel subsidy - it prioritizes the wealthy over the poor.
A direct cash transfer to the poor for nutrition support remains the most effective way to alleviate.
Hope we head that way
@MwangoCapital
@WehliyeMohamed
@RobertAlai
Is it anyone's responsibility to feed anyone else? You missed the context she never called anyone a beggar. FYI 99% of Kenyans are borderline beggars( that's why we are always fundraisin).... but only because we are still on this path to economic emancipation.
Corona mitigation won't be a 2-week exercise. it's a multi-year vigilance issue that will forever change the way we live, interact & do business. A lot of jobs might be on ice until we get a vaccine-think travel, tourism, hotels & bars. What are all the folks supposed to do now?
@calvinokello4
The election was lost in Baba's strongholds- if the turnout had mirrored 2017- he would have been home and dry. look his folks in the eye who stayed away because they were told the race was won already through huge billboards and opinion polls.
@ledamalekina
@ahmednasirlaw
You can’t have a monetary union without a fiscal union - something the EU learnt during the Greek crisis. It won’t be long before you have acute imbalances from the net exporting to the net importing (where will they source this single currency if trade flows are flowing in one
@dopycontent
@paulinenjoroge
We only liked Kibaki after he left- pick newspapers and read headlines from that period to see what the national mood was.
We are geared to always complain about the government- then look back kindly at them after they leave
The 1.5% railway development import levy has collected about 120bn to date if these funds were ring-fenced, we could pay off 100% of the SGR loans in another 5 years
@RkrPeti
@paulinenjoroge
The challenge isn’t the debt itself- it’s the ability to raise dollars to repay it.
You might wonder - how did we end up with $38bn in debt with no reserves to show for it ?
That’s the problem- we have been importing 21bn$, exporting 6bn $- which left an annual trade deficit of
This makes sense - we should only have one revenue collection agent to get a 360 degrees view of tax-payers.
Also from a cost perspective, KRA has economies of scale to collect at a lower cost (2.5% management fee ).
The S. Africa SARB announced they will start buying government bonds across the yield curve to add liquidity & drive interest rates down. To the Naysayers who says only developed economies can undertake unconventional policies - let's be open-minded
@WehliyeMohamed
@alykhansatchu
Public sector driven economic growth will never best a private sector led one. The gov't isn't an efficient allocator of scarce debt capital.
Now we have good roads & rails but no capital to spur investments.
Fiscal revenues have stagnated, yet the debt utilized is already due
I come home once at least every 3 months. I have not seen the economy in this state for a very very long time. In fact never in this state. The 2 levels of govts have taken away the little MSMEs had in the form of pending bills. We have guys driving Mercs unable to pay sch fees
@CptHarrisjnr
@RkrPeti
@paulinenjoroge
The first solution is always to let your foreign exchange rate adjust - remember we were importing $21bn and maybe just half of that was absolutely necessary (think oil, raw materials, pharmaceuticals etc). The other half is conspicuous consumption items like expensive cars,
@ZITOSIS
@ahmednasirlaw
@TheStarKenya
@makaumutua
Make it make sense that the existing laws in the books have never been enforced since 1960's - same as Kenya. Passing this law is most likely just a symbolic affair that won't lead to any change - but will cost Uganda billions of dollars in trade and aid
The withdrawal of KES 1000 notes won't be as impactful as is being touted
1 KE allows foreign currency deposits and notes (ease of conversion to $,€,£ etc)
2. The economy is over 80% informal
3. 4 months is too long a window
4.Over 70% of transactions happen electronically
11. In summary
1. Make a huge stimulus program targeting payroll replacement, nutrition, rent, taxes etc
2. Fund via QE (print)
3. Cut CRR and CBR
4. Severe import restrictions to allow capital markets remain open and force local consumption
5. Keep at it for as long as needed!
@Michael199200
@jaimetoons
Do you reckon if it was a different message, like say a birthday one, anyone would have been concerned? Or is their problem the message? In which case it's less about being a good neighbor than trying to muzzle people's voices!
@coldtusker
@MihrThakar
Pension Trustees have a mandate to chase the best returns... Not support neighborhood economies.
Those are private and not public funds
We are heading straight into a debt trap. Revenues aren't even enough to cater for recurrent expenditure +debt service costs - which means we actually borrowed to pay debt service costs.
That will become an endless hole eventually. Debt is not paid by GDP size but by revenues
This journey...
KRA missed its target by Sh350bn, the highest in five years that saw the Government net Sh1.43tn in taxes in 2019/20
As a result, Treasury borrowed Sh786.8bn to plug the shortfall, pushing the country further into debt distress.
So annoying when Kenyans quote a Ugandan tweet going on about how strong their currency is. We already know our shilling is weak,Kamau. Go eat githeri or something.
@Superdeviant
@DavidNdii
Support is based on ability to pay- the objective is to not leave anyone behind (or leave as few people as possible). A lot more of the funding will go to poorer folks than those able to pay. One more rung in this 'bottoms-up' economic model
Murban Generic contract on a freefall. Should eventually impact on the $/KES exchange level with energy imports making c.28% of total imports (& having jumped by 60% in 2022)
@WehliyeMohamed
@MwangoCapital
@surambaya
@Inde_Fatigable
There was nothing wrong with 8-4-4 for its time/age.... But it's sorely misplaced for the future. This is the informational age, you don't need to learn everything by rote- what you require are analytical, research, organization etc skills that enable you navigate and excel
Between sept '18 & Aug '19 our fiscal debt increased from 5.146trn to 6.009trn, an increase of 863bn. In the meantime revenues barely increased by 130bn.
The trajectory is frankly extremely worrying- we need to start running primary surplus budgets to curb further debt expansion
@allarick3_
Think it's more of a Jubilee first term moment - unbridled infrastructure development at all costs. Great intentions but fraught with medium term fiscal risks.
Kibaki ran very conservative budgets with very low fiscal deficits (and borrowing).
@AlinurMohamed_
@OleItumbi
How?
Only through production can the cost come down - and the government doesn’t produce any goods.
Lowering taxes will mean more printing (which is how we got here in the first place ) which debases the currency and devalues the kenya shilling, increasing costs if imported
@Lutta10
@RkrPeti
@paulinenjoroge
I don’t think leaders seek to cause hurt . Sometimes good intentions lead to bad outcomes.
We had, and still do, an infrastructure deficit issue. Calibrating how much should be done via debt or taxes isn’t easy. We just went a little further than we should have with debt. But I
Brent Crude jumps 3.3% to 6-months highs above $74 with USA signaling no more waivers for Iranian crude purchases beyond the May 2 expiry- which will drain 1.1mio barrels a day in an already tight oil market.
For KE-Expect a lot of pain at the pump in the next 2 ERC reviews
@paulinenjoroge
These were not financed and blew the deficit to 8 trillion in a few years - debt service interest is growing faster than revenues. To avoid a full fiscal meltdown 500bn+ must be cut from recurrent expenditure.
Jubilee Voodoo economics nearly sunk Kenya. You can't print forever
Effects of the Kenya shilling adjustment in action. A weaker currency, while increasing cost of imports, is on the other hand underpinning a renaissance of Kenya exports to the rest of Africa.
Official trade figures show the value of Kenya’s exports to Uganda had increased by
Kenyans please don't kick yourself too hard , we may not agree politically but never ever hate Nation Kenya. While you see and even focus on doom & gloom others see green grass across their fence.
This is a terrible move by parliament. It Might look like they are helping individuals, but we are urbanizing fast & in future folks won't have a 'shagz' to retire to.
We will end up with a lot of destitute + homeless old folks.
Pension savings should be compulsory for all
Vide a Gazette notice, the MinFin has reduced Kenya's revenue target by 5% to 1.61 trn from 1.69 trn. This reflects the lower collections over the first 5 months of the fiscal year
@WehliyeMohamed
@alykhansatchu
@hamzanuur33
@ahmednasirlaw
@DonaldBKipkorir
@makaumutua
That's the attitude EU took when Asia went on a lockdown-But where are they now? The US is still avoiding hard decisions, but NY showed what might happen jana.
You can't put the economy over people's lives, because if all goes south, you won't have one without a healthy nation
The only winner yesterday is the 'truth' that a document can't lead to fair elections. The celebrated chaos & violence (+ trends towards autocracy) lends credence to the call that strengthening our institutions is the only way to insulate our elections from politicians antics