Deputy President William Ruto has defended Eurobond II and the government’s growing appetite for external loans.
In his first public response to the outrage that greeted Eurobond II, Mr Ruto on Friday said the Sh200 billion secured on Wednesday in Londonwould be spent on development, not scandals.
The heavy loans, he said, would be used to fund the Jubilee government’s Big Four Agenda—housing, food security, manufacturing and universal health.
“Any borrowing is borrowing that is measured and that we have the capacity to pay,” he said at Kiawara in Nyeri as he commissioned the construction of Kiawara-Ngaringiro road.
“It is in the interest of the country and we remain a prudent and responsible government.”
The government, he said, would continue to borrow despite criticism from the opposition.
“Jubilee will not be involved in politics that divide the country. 2022 (General Election) will only be relevant if we will have improved the livelihood of Kenyans.”
Kenya raised Sh202 billion ($2 billion) in a new sovereign bond issue that was closed on Wednesday.
The bond has been issued in two equal tranches of 10 years at a coupon of 7.25 per cent and 30 years at a coupon of 8.25 per cent.
The bond, which is being listed on the London Stock Exchange (LSE), was highly oversubscribed, attracting bids worth $14 billion (Sh1.4 trillion), which the Treasury says is an indication of confidence in the long term prospects of the Kenyan economy by international investors.
“The funds will be applied towards the government’s development initiatives and liability management. We will continue to invest in the infrastructure and capacity to roll out these programmes,” said the Treasury in a statement.
Mr Ruto, while revisiting the scandals that rocked retired President Mwai Kibaki’s administration, dismissed fears that the loans would be misappropriated.
“There are people who borrowed money just to play games with it resulting in Anglo leasing and Goldenberg government,” he said, referring to some of Kenya’s biggest scandals that threatened to bring the economy to its knees.
Lawmakers who attended the Nyeri event supported Mr Ruto, saying they would approve requests by the government to borrow more funds despite International Monetary Fund’s appeal to Parliament to rein in Kenya’s appetite for new loans.
Kieni MP Kanini Kega said the National Assembly would not act as a barrier to the country’s desire to borrow money.
“As legislators, we are ready to pass any request for loans. The dams that the government is building in my constituency amount to Sh20 billion, I will be in the front line to support loans,” he said.
Gatundu South MP Moses Kuria said the government was not at fault as long as the money is spent on development projects.