Public debt, the biggest threat to our national security
By; Abdille Yussuf
Some years back, the then Chairman of the Joint Chiefs of Staff of USA, General Michael Mullen, was giving a brief to a committee of the House of Representatives. America was then in the midst of several war fronts in Afghanistan, Iraq and Libya. A congressman then posed a question to the General on the greatest threat facing the national security of America. The chairman quipped, “The most significant threat facing our national security is our debt.” The congressmen were shocked. Just immediately thereafter a bipartisan group of congressman introduced a resolution in the House to recognize the national debt as a threat to national security.
Our nation has been grappling with this issue for quite a while. Nearly a year ago, in a rare sit down with the press, the president was questioned on the level of public debt in our nation and its sustainability. The president was specifically asked whether e he was willing to release documents relating to the terms and conditions attached to the SGR loan. The president had promised to release the documents. The country is still awaiting the release of these public documents. The Commission on Administrative Justice should demand the release of these documents as required by the Access to Information Act.
A few weeks ago , in its bid to meet its egregious spending habits and facilitate access to international loans the executive approached Parliament to amend regulations to the Public Finance Management Act in order to raise the public debt ceiling to a whopping 9 thrillion. In the spirit of the handshake and without any regard to the threat debt poses to the nation and future generations the legislators acceded to the demands of the bureaucrats at treasury.
It’s beyond time for our nation to realize that the insanity of our government spending and our financial indiscretions poses a great threat to our national security. Most of the loans that the government is borrowing are shrouded in mystery. This is in breach article 201 of COK 2010 that requires among other things openness and accountability including public participation in financial matters.
The world is replete with examples of nations that mortgaged strategic assets to China for failure to service loans. Sri Lanka signed over to China a strategic port for failure to pay loans it took to build the port. Zambia’s national electricity company ZESCO, a major airport and broadcasting corporation are under a threat of takeover for failure to meet loan repayment promises. Many other countries such as Djibouti, Kyrgyztan and Pakistan are facing a debt-trap diplomacy in which China offers cheap infrastructure loans laced with sting of default if the countries’ economies can’t generate resources to repay the loan. Are our strategic assets such as ports and airports safe? Public disclosure of the bilateral agreement signed to procure these loans will put this question to rest.
Another odd thing about the mega projects these debts are financing is that the contracts are awarded to foreign contractors who import the skills and technical know-how from their countries and they end up repatriating the financial resources they earn to their home countries. In essence this arrangement denies our nation the economic stimulus that these infrastructural investments would have injected into our economy.
There is also a tendency to compare Japan and America to Kenya on the level of debt and their sustainability. Our economy dwarfs in comparison and is shrinking by the day. We don’t have a discernible monetary and fiscal policy other than an ever ballooning expenditure. Our key revenue sectors such as tea, coffee and sugar have been run down due to sheer neglect and corruption. Our tax regimes are driving companies to shed off employees. It’s estimated we lose a third of our national budget to corruption. The energy sector that was supposed to spar economic growth has been rendered inefficient due to its monopolistic nature. A classic example of the ruinous impact of the inefficiency of the energy sector is the municipality of Wajir which has been in darkness for a whole year, dealing a severe blow to its economy that was resuscitated by devolution. In effect although we are wantonly borrowing, our ability to pay back these loans is shrinking due to declining productivity.
Decreased revenue will mean that we allocate huge resources to repay the loan at the expense of education, healthcare, manufacturing and agriculture which will further lower productivity leading to eventual default. If our nation does not change its course we will visit upon or self one of the worst catastrophe this nation has ever witnessed, an economic crash. We will then be at the beck and call of donor nations and international financial institutions. Our sovereignty as a state will then be in question.
To avoid this, Parliament should take its oversight role and responsibility to future generations seriously. Debt level should be a key plank of the manifesto of political parties in the next election. There should also be legislation to establish a national debt management institution that is independent from the influence of treasury. The institution should not only be tasked with monitoring the level of debt but also transparency and clarity to the public on the term and conditions of public debt. In view of our declining productivity the nation must also learn to live within its means and pursue a balanced budget policy with the little resources that we have.
(The writer is a commentator on socio- political issue)
