Opportunity cost ya kununua ndege cash for a poor country ni kubwa sana. Namaanisha kwamba hio pesa kama ingetumika kufanyia miradi mingine basi ingeleta faida kubwa zaidi kwa uchumi wa Tanzania. Especially considering kwamba neighbours wenu wengi tayari wana airline ikiwemo Kenya na Ethiopia. Kulikuwa na ulazima gani wa kutumia almost $1 billion kununua ndege hizo 11 in cash wakati bado hamjajenga miundo mbinu yenu vizuri? Starting a new airline from scratch is an expensive affair and it is even more expensive to buy aeroplanes instead of leasing them and especially if you are buying upfront without a grace period. The multiplier effect of these purchases will be small. There are no forward or backward linkage industries associated with the purchase. Hakuna industry ambayo itapop up kwa sababu mumenunua ndege 11. Lakini kama mngejenga lami mahali ambapo hakukuwa na lami basi hio itakuwa na impact kubwa zaidi maana itawezesha wakulima kusafirisha mizigo yao to the market. Tatizo lenu kubwa ni kwamba mnataka kukimbizana na Kenya kwenye kila sector. Hii ya kununua ndege 11 in cash mlikurupuka
peleka upumbavu, and what is the opportunity cost for a country like Kenya that has failed to honor the debt it took from Afrieximbank? nashindwa kukuelewa wewe ni economist wa wapi? 👇
The value of Kenya Airways’ debt guaranteed by the taxpayer increased by Sh3.1 billion over the last one year on a weakened shilling against the dollar, data by the Treasury shows.
www.businessdailyafrica.com
KQ State-backed debt rises on weak shilling
FRIDAY NOVEMBER 13 2020
A Kenya Airways aircraft at JKIA. FILE PHOTO | NMG
By OTIATO GUGUYU
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SUMMARY
- The value of Kenya Airways’ debt guaranteed by the taxpayer increased by Sh3.1 billion over the last one year on a weakened shilling against the dollar, data by the Treasury shows.
- A public-backed debt is an external obligation of a private debtor that is guaranteed for repayment by a public entity.
- An annual report by Kenya Airways shows the government issued a $750 million (Sh81.8 billion) guarantee to the US Exim Bank and 11 local banks and in return, the carrier issued the government with 184,321,067 shares at Sh7.78 per share.
The value of Kenya Airways’ debt guaranteed by the taxpayer increased by Sh3.1 billion over the last one year on a weakened shilling against the dollar, data by the Treasury shows.
The volume of the national carrier’s debts backed by public taxes jumped from Sh76.7billion in June 2019 to Sh79.8 billion in June this year, mainly on currency movements, according to the newly published Public Debt Management Report. The airline has since 2017 received taxpayer-guaranteed debt to help it restructure loans owed to various parties.
A public-backed debt is an external obligation of a private debtor that is guaranteed for repayment by a public entity.
An annual report by Kenya Airways shows the government issued a $750 million (Sh81.8 billion) guarantee to the US Exim Bank and 11 local banks and in return, the carrier issued the government with 184,321,067 shares at Sh7.78 per share.
“As part of the balance sheet restructuring, the Government of Kenya issued guarantees in the aggregate amount of $750 million in favour of Exim Bank and a consortium of Kenyan banks in relation to certain obligations of the Group and Company to Exim Bank and the consortium of Kenyan Banks,” KQ said.
As at December 2019, the struggling airline owed Sh75 billion in loans that stemmed from purchase of aircraft spare engines and pre-delivery payments for ordered aircrafts.
The aircraft were registered in the name of special entities for the purpose of holding collateral for the financiers, whose equity are held by the security trustees on behalf of the respective financers.
The legal title is to be transferred to Kenya Airways Plc once the loans are fully repaid.
The Export-Import Bank of the United States of America (Eximbank) has guaranteed part of the loan of Sh54 billion taken from Citibank London and J P Morgan under Tsavo financing.
African Export-Import Bank (Afrexim) bank holds Sh15.9 billion financed through Samburu limited.
Kenya taxpayers risk carrying some of the airlines liabilities is KQ is unable to pay.
By the end of December last year, the airline was already in a precarious position having breached liquidity ratios that could trigger the penalty of having to repay debts worth Sh77 billion within one year. KQ obtained waivers from international lenders allowing the breach.
FYI
paying hard cash from GoT has avoided this trap! ☝️