Kenya is set to become the first country in modern history to file for bankruptcy after the interest accrued from current loans exceed the revenue collected by the government.
The situation means that by 2022, all the revenue collected by the government will not be sufficient to pay the interest from the existing loans, leave alone the principal, recurrent expenditure and development.
The decision was arrived after the government ran out of excuses, with almost $100 billion borrowed in the last few years maturing. In the recent past, the government had resulted to robbing Peter to pay Paul, but even Peters are in short supply. After running out of new places to borrow in order to pay older debts, the government opted for bankruptcy.
“For many years, we have been borrowing money to eat. All the monies we’ve borrowed in the last 8 years has been stolen, and time to pay has come. Unfortunately, the people who ate the money never invested in any profitable venture, hence no accompanying tax as we had hoped. The only option we have is to make this unfortunate to file for bankruptcy.”
Ungovernable Kenyans
The debt stress was aggravated by Kenyans online who chased away the last remaining lenders, including the IMF. In the past few days, IMF had hoped to stamp their authority in East Africa by advancing Kenya some loan, but Kenyans have jeopardized that.
Implications
What does it mean for a country to file for bankruptcy?
Usually, countries just default on their debt obligations but Kenya is seeking a different path. By filing for bankruptcy, Kenya will simply stop paying the debts and tell the world that it has no resources to pay. There will be no assets that will at be at risk of seizure by creditors unless those that are outside Kenya. The embassies have diplomatic immunity, and only Kenya Airways planes are at risk, which would be a good riddance.
Let Kenyans welcome the chicken home.
