Menu
0 Comments

As of September 2016, our public debt was Ksh 3.6 trillion from Ksh 1.5 trillion (2012), of which the external debt was Ksh 1.7 trillion, and internal debt was Ksh 1.85 trillion (Central Bank of Kenya). Meaning for every Ksh 100 collected by the Kenya Revenue Authority, Ksh 32 was spent on servicing her debts.

As the National Budget increases yearly, and K.R.A missing her revenue collection target, we are faced with Budget deficits, forcing the Government to borrow funds either externally or internally. Perpetuating a vicious cycle where the only outcome is the steady increase in our National Debt.

If we compare our Debt-to-GDP ratio with other countries for example; Japan- 250.40 %( 2016), U.S.A- 106 %( 2016), & United Kingdom- 89.3 %( 2016), we presume our Debt-to GDP ratio is lower hence sustainable & on the right trajectory, but in contrast the rate its increasing, it will become untenable, and likely heading in the opposite direction according to the World Bank and the I.M.F. Then why are overseas debt collection with a higher Debt-to-GDP ratio than ours have a sustainable national debt? What mechanisms do they use to manage their National Debt? Can our Government with its limited options use those mechanisms, instead of the heavy taxing & borrowing, with their effects passed on us?

Unlimited Monetary Sovereignty shows how countries like Japan, U.S.A & U.K are able to sustain their National Debt. Monetarily Sovereign Government means; they have the exclusive & unlimited power or ability to create their own sovereign currency i.e. they have total & absolute control over their sovereign currency.

Which means, these Governments can do as they wishes with their own currency, i.e. they can equal their currency to any unit or amount (1 USD = 10 Euros or 1 USD = 5 Ounces of Gold), as creators of their own currency they have absolute ownership, hence have other reliable options other than taxing or borrowing, or be forced into bankruptcy, and can pay any invoice of any size, at any time.

Leave a Reply

Your email address will not be published. Required fields are marked *