Raila Odinga, the leader of the Azimio la Umoja One Kenya Coalition party, has raised concerns and demanded an explanation from the Kenya Kwanza government regarding the alleged borrowing of Ksh.213.4 billion just a week before the start of the new financial year.
In a statement released on Tuesday, Odinga questioned the administration led by President William Ruto, labeling the borrowing as “suspicious” and urging the government to be transparent about the new debt.
Odinga specifically questioned the source of this large internal debt, its timing in relation to the passing of the controversial Finance Bill 2023, and its abnormally high-interest rate of around 16 percent compared to other local lenders. He highlighted that the ongoing focus on the Finance Bill provides a convenient cover for such borrowing and emphasized the need for clarity from the Kenya Kwanza administration.
According to Odinga, the government borrowed Ksh.213.4 billion from local financial institutions in a single day last week. He expressed concern over the curious and disturbing features of this borrowing, including its occurrence just ten days before the start of Kenya Kwanza’s inaugural Financial Year on July 1, 2023, and the exceptionally high-interest rate of 15.84 percent.
The opposition leader questioned the motive and expenditure behind this substantial amount, arguing that it is implausible for such funds to be fully utilized within a mere ten days and is not in line with legal regulations. He highlighted that this single borrowing constitutes almost half of the approved annual domestic borrowing of Ksh.438 billion for 2022-2023, raising further questions about the government’s financial decisions throughout the year.
Odinga demanded a full account of where this money is going, especially given its timing just a week before the start of the new financial year. He emphasized that Kenyans deserve transparency and urged the government to explain the need for such massive borrowing during this particular period.
The Azimio party leader expressed concerns about the impact of this single borrowing on market liquidity, asserting that borrowing from the private sector would have a different effect. He emphasized that the high-interest rate incurred through this loan will directly affect the rates for the private sector and individuals, potentially burdening them with higher interest rates of 24 percent or more on their loans.
Odinga questioned the government’s understanding and consideration of the consequences of such reckless borrowing at exorbitant interest rates on businesses and individual Kenyans. He highlighted the potential negative impact on the private sector and urged the administration to reconsider its borrowing strategies, taking into account the broader economic implications.
