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The African Development Bank (AfDB) has pledged a new liquidity lifeline for the cash-strapped Kenya Kwanza administration to settle its maturing obligations amid mounting concerns about Kenya’s repayment ability. 

The pan-African lender said on Wednesday it is in talks with the National Treasury on how to help deal with some of Kenya’s massive obligations that have triggered widespread default concerns. 

“The bank is engaged in negotiations with the National Treasury to explore ways to use guarantee instruments (guarantee schemes) that enhance Kenya’s ability to access global financial markets to finance its budgetary needs,” said AfDB in emailed responses to The Standard’s queries. 

“The bank is currently engaging the Cabinet Secretary National Treasury, Professor Njuguna Ndung’u, on how best to leverage the country’s reserves as guarantee to mobilise additional resources to support repayment of maturing bonds and other debt obligations.” 

AfDB Secretary General Vincent Nmehielle told The Standard separately in an interview Kenya has shown “the ability to meet its maturing debt obligations.” 

“The partial payment of the maturing Euro bond of June 2024, is a testament to the government of Kenya’s ability and desire to meet its debt obligations,” he said while allaying fears of the possibility of a default for Kenya,” he said. 

AfDB approved budget support to Kenya last year amounting to Sh12.8 billion. The loan is expected to be finalised this year ahead of disbursement.  The bank said once this is done, another budget support operation of an unspecified amount is expected to be processed in the third quarter of this year. 

Professor Nmehielle spoke ahead of the 59th Annual Meeting of the Board of Governors of AfDB, which will be held from May 27-31 at the Kenyatta International Convention Centre (KICC).  The theme of the meeting, which will bring African Finance ministers and heads of government to Nairobi, will be Africa’s Transformation and Reforms of the International Financial Architecture. 

“The objective of the theme is to bring to the fore the urgent need for reforms of the international financial architecture to mobilise resources at scale and accelerate the pace of Africa’s structural transformation,” said Prof Nmehielle. AfDB is set to give Kenya a financial lifeline at a time economists have issued a fresh dire warning, emphasising the urgency for the Ruto government to take immediate action to avert a potential economic collapse caused by the impending Sh320 billion Eurobond repayment in just five months. 

The repayment plan for Kenya’s $2 billion (Sh334 billion) Eurobond, which is scheduled for June this year, has sparked controversy and is being keenly watched by global investors. By Nikko Tanui, The Standard

Transport CS Kipchumba Murkomen addressing during the launch of KeNHA 2023-2027 Strategic Plan at Barabara Plaza in Nairobi on January 26, 2024. [Boniface Okendo, Standard]

There is an unwavering determination by the Kenya Kwanza administration to raise taxes. That is understandable considering that it needs money - a lot of money - to seal the debt hole dug by the Jubilee government and which the current regime continues to deepen. William Ruto's government also desperately needs money to implement its development plans.

That said, there should be a limit to its tax ambitions. Consider the latest revelation by the Transport CS Kipchumba Murkomen of a plan to charge Kenyans for using some of our old roads ostensibly to help build new roads and maintain the existing ones.

And not only that. The CS has also hinted at the possibility of increasing the road maintenance levy. 

 

The proposals are preposterous considering that Kenyans have in recent months been paying a heavy price to keep their vehicles on the road due to the prevailing record-high fuel prices in extremely tough economic times.

When President Ruto took over from Uhuru Kenyatta slightly over a year ago, petrol was retailing at Sh159 per litre. Currently, it is going for Sh212 in Nairobi down from Sh217 a month ago. 

Apart from the global dynamics, the high fuel prices have been occasioned by the enactment of the Finance Bill, 2023, which increased the VAT on petroleum products from eight to 16 per cent.

Ironically, while the government hoped to gain dividends, the move had the exact opposite effect. Kenya Revenue Authority recorded a deficit of Sh12.9 billion in tax collections from the oil sector after Kenyans reduced spending on petroleum products due to the high fuel prices.

It seems the government never learns from its mistakes as Murkomen's proposals will definitely make matters worse. 

It is unconscionable for the government to mull such tax moves at a time when Kenyans, including the salaried ones and those in business can hardly make ends meet due to high taxation and a struggling economy. Mr Murkomen and the government that he serves seem to out of touch with the economic reality on the ground. The Standard

Rishi Sunak press conference© PA Wire

Rishi Sunak is braced for further battle in the Lords over his Bill to revive the Government’s Rwanda scheme as the legislation faces scrutiny from a number of prominent critics.

Some 71 members of the upper chamber are expected to speak at the second reading debate of the draft law on Monday. 

Among them is the Archbishop of Canterbury, who has voiced profound concerns about the plan to send asylum seekers who cross the Channel in small boats on a one-way flight to Kigali.

Lord Carlile of Berriew, who earlier this month warned the Government is moving towards “totalitarianism” in its handling of the policy, is also due to appear.

The crossbench peer has suggested the Lords would seek to undo what he described as politicians “meddling” in the independent courts.

Mr Sunak’s Safety of Rwanda Bill survived third reading in the Commons after the Prime Minister saw off a Tory rebellion which had sought to toughen the legislation.

MPs on the right of the party largely backed down following speculation that the draft law could be torpedoed unless amendments were made, including to ensure UK and international law cannot be used to block a person’s removal to Rwanda. 

In the end just 11 Conservatives voted against the legislation but it faces a bigger test in the Lords, where many members have expressed unease about the plan.

The PM has urged peers against blocking “the will of the people” by opposing the Bill as he faces an election year having made “stopping the boats” a key pledge of his leadership.

But first blood was drawn in the Lords last week, when peers backed by 214 votes to 171 an unprecedented move seeking to delay a treaty with the east African nation which forms part of the Government’s plan.

The unelected second chamber backed calls for Parliament to not approve the pact until ministers can show the country is safe – though unlike the Commons, which has the power to delay ratification of a treaty, the Lords can only advise.

The asylum scheme comes with a £290 million bill but a series of legal challenges has meant no flights have taken off since it was first proposed in 2022, when Boris Johnson was in Number 10.

 

Under the plan, people who cross the Channel in small boats could be removed to Rwanda rather than being allowed to seek asylum in the UK.

The legislation, along with the recently signed treaty with Kigali, is aimed at ensuring the scheme is legally watertight after the Supreme Court ruling against it last year. Story By Nina Lloyd, Evening Standard

Muscat: Sheikh Khalifa Ali Al Harthy, Undersecretary of the Foreign Ministry for Political Affairs received here today Othman Masoud Othman Sharif, Fist Vice-President of Zanzibar and his accompanying delegation. 

During the meeting, the two sides reviewed areas of bilateral cooperation and means of enhancing them in various spheres, especially in economic and cultural fields. 

The meeting was attended by Saleh Mohammed Al Saqri, Head of the East Africa Department at the Foreign Ministry, Fatima Mohammed Rajab, Ambassador of the United Republic of Tanzania to the Sultanate of Oman and officials from both sides. Source, Times of Oman

Pentecostal Assemblies of God (PAG) Kenya General Secretary Rev Dr Richard Obwogi. PHOTO DR. RICHARD OBWOGI

Pentecostal Assemblies of God (PAG)-Kenya General Secretary Dr. Richard Obwogi has dismissed a petition filed by a Nakuru based doctor calling for taxation on offerings and tithes stating that that would not be accepted

Speaking in Amalemba, Kakamega County on Sunday, the official stated that it would be unfair to tax offerings and tithes asking those seeking to tax churches to get those taxes from heaven. 

“Offering is not taxed, we will not accept that. If you want to tax it, make a request in heaven,’ he stated.

While speaking during a meeting bringing together over 60 churches from across the nation, Dr Obwogi stated that individual congregants were getting taxed and there was no need to tax offerings. 

“There is somebody somewhere, who is pushing that churches pay taxes, protect your faith brother. What you are saying is that churches get taxed, individual congregants are already getting taxed,” he added. 

Obwogi further argued that it was not prudent to tax offerings and tithes, describing them as sacrifices made by people seeking to secure blessings from the altar. 

“People bring their problems to the altar. If you start taxing sacrifices now you will be crossing the line,” he reiterated

He further advised courts not to be politically influenced but stick to justice and called on the government to obey court orders.

At the beginning of the year, a Nakuru-based doctor, Magare Gikenyi, filed a suit at the High Court in Nairobi which sought for tithes, offerings, and donations in places of worship to be taxed.

"The public finance system shall promote an equitable society, and in particular the burden of taxation shall be shared fairly," read part of the suit. 

 The petitioner questioned why the Income Tax Act provides tax exemptions to a class of people, hence contravening the same law that dictates fairness in the remittance of taxes.

Dr. Obwogi also commented on the contentious issue about blessing same gender couples which had elicited discussions especially in the Catholic Church stating that such would not be acceptable. By CEDRICK KHAYEKA , Kenyans.co.ke

 
 

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