- According to the draft Budget Review and Outlook Paper of Kenya’s Treasury, it proposes to take new loans of Sh1.87 trillion in the two years to June 2020
- The proposal will mean that Mr Kenyatta will have borrowed at least Sh6.1 trillion to implement his manifesto in 10 years in power
According to the draft Budget Review and Outlook Paper of Kenya’s Treasury, it proposes to take new loans of Sh1.87 trillion in the two years to June 2020, pushing Kenya’s debt to Sh8.06 trillion. In other words, the government of Kenya plans to borrow an average of Sh2.5 billion daily till the end of President Uhuru Kenyatta’s final term in August 2022.
The approval of the proposal will mean that Mr Kenyatta will have borrowed at least Sh6.1 trillion to implement his manifesto in 10 years in power. The ruling party of Kenya, the Jubilee Party has been spending heavily to build new roads, a modern railway, bridges and electricity plants, driving up borrowing to plug the budget deficit. Ironically, the growing debt burden further weakened the economy committing more than half of taxes to paying loans, leaving little cash for building roads, affordable housing and revamping of the ailing health sector. The Jubilee administration is faced with several challenges including revenue shortfalls amid the coronavirus-related disruptions and the push to complete projects ahead of Mr Kenyatta’s exit, forcing the Treasury to accelerate borrowing over the next two years.
The Parliamentary Budget Office – a unit which advises lawmakers on financial and budgetary matters –(PBO )wrote in a budget watch report earlier this month that the shortfall in revenue due to the Covid-19 pandemic is likely to drive Kenya’s debt beyond the Sh9.0 trillion legal threshold. It states that the Kenyan government incurred heavy expenditure
in previous financial years, on infrastructural projects, energy production as well as social expenditures. Given the current and projected expenditure demands, along with the impact of Covid-19, it projects that the Kenyan debt stock could reach Sh9.2 trillion in FY 2022/23.
The government is in talks with the World Bank, for the provision of an additional budgetary support loan, the third from the World Bank. After the country was upgraded to lower middle-income economy in September 2014, Kenya’s access to cheaper international loans from multilateral lenders reduced forcing it to resort to expensive short-term loans from international lenders.
