Kenyans should expect President William Ruto’s government to collapse soon should he proceed and stick to some of the policies he is initiating, Central Banker Mohamed Wehliye has warned.
This comes at a time when Ruto, who is barely three months old in office, is being seen coming up with new modes of operation, some very different from those of his predecessor Uhuru Kenyatta.
Among them is his new announcement that his government will avoid loans as much as it can, and only work with lenders charging an interest of less than ten percent if it has to borrow.
But Wehliye, a Senior Advisor at Saudi Central Bank, has suggested that there is no lender who can operate under the strict description, and the government will soon shut down due to lack of funds.
“The money markets will shut and so will the government. I am not sure these kinds of decisions have the backing of the National Treasury. If they do, then we have a bigger problem! Let’s hope this was just talk and nothing more!” he said on Friday.
He added that there is nowhere Ruto will get loans at that interest rate, thanks to the current inflation rate.
“CBR is 8.5%. That is the policy rate that sets the minimum borrowing rate. Then there is something called the term structure of interest rates. How do you want to borrow 2/3/5 year money at 0.5% above CBR? How do you borrow at a single digit when inflation is double-digit?” he posed.
But Ruto has said that he cannot drive the country deeper into debt, announcing that some development projects will have to be postponed for that reason.