The Mountain Journal
KICC Chairman Irungu Nyakera has proposed that the government
should raise a large bond/ debt from bilateral or
multilateral partners and employ two strategies.
He outlines that the government can buy off expensive short term treasury papers, yields on government paper are too high and retiring
Some of them will have numerous benefits.
Interest in savings will be significant thus need to lower interest rates and allow commercial banks lend to individuals and corporates due
to less uptake of government paper.
The recommendation will help reduce the cash flow crisis in debt management/ rollovers, and lengthen debt maturity profile and thus bring
back money into circulation.
Another factor for consideration, he say, is the government pay the pending bills which are less than Sh100million owed to local companies, while applying some haircut if need be.
“By doing so, part of the money will immediately
come back as taxes but broadly speaking this will be
equivalent to an economic stimulus package, bringing
back money to circulation”.
He adds that when there is no money in circulation, true there will
be minimal or no inflation but it will also heighten
likelihood of a recession and certainly guarantee
lower government revenue collections.
“ When there is little or no money in circulation because we have over borrowed. But it has nothing to do with the current administration,” said Nyakera adding that debt to GDP has been way above the 50% IMF threshold for developing countries – 2019:59.08%, 2020:67.97%, 2021:68.23%, 2022:68.42%,
2023:73.26%, 2024:72.97%,” said KICC chairman.
