This archive report was first published on 19 November 2019.
Kenya's economy is facing a cash shortage, prompting the government to implement austerity measures to address the issue.
As part of these measures, the treasury has instructed parastatals to remit excess cash, with a target of collecting approximately half of the Sh78 billion needed.
However, this directive has raised concerns among economists, with David Ndii warning of severe consequences. In a thread, Ndii deconstructed the directive, highlighting its implications on the economy.
According to Ndii, the directive will impair the cash flow of parastatals, affecting their operations and service delivery. He also noted that the state corporations will now have to rely on the unpredictable exchequer releases, which may lead to default on suppliers.
Furthermore, Ndii pointed out that the confiscation of treasury bills and bonds is a default action, suspending the law and exposing the government's desperation. He also warned that this move may set a precedent for other vulnerable investors, such as public pension funds.
Advisor Mohamed Wehliye also weighed in on the issue, highlighting the complexities of the directive. He explained that the government has instructed parastatals to transfer ownership of all treasury bonds to the government, effectively forcing debt cancellation.
Published on November 19, 2019, at 13:52:46.
