By E Njega
The government is in a tight corner over interest capping law. The IMF wants it reversed but that will make it costly for government to borrow money. The interest expense might rise close to KShs 500 Billion which is not sustainable.
The capping has also almost shutdown the private sector which can no longer access credit. Gross Non Performing Loans are almost hitting 13% of the loan books of banks. Why would a bank lend at 13.5% in such a risky environment?
This capping is a dangerous experiment as we have always insisted. It will take years to recover from the mess.
MPs might refuse to reverse the caps but eventually IMF will have their way. It is only a matter of time before we turn to them for economic rescue.