The country is expected to face an all-time high debt index at the end of President Uhuru Kenyatta’s term in August 2022.
Projections from treasury indicate that the public debt by the end of June 2022 will be standing at sh7.17 trillion. The public debt as at June this year stood at a staggering sh5.04 trillion.
When the Jubilee administration under the leadership of President Uhuru Kenyatta and his deputy William Ruto took over from the Kibaki regime in June 2013, the debt was at sh1.89 trillion. Much of the amount borrowed has been pumped into the construction of new transport infrastructure including new roads and the Standard Gauge Railway as well as expansion of electricity network.
The treasury has been forced to borrow to cover up budget deficits therefore plunging the country deep into debt. This has forced the taxman to remit half of what he collects into servicing loans meaning the country doesn’t have enough for development projects. This has caused al of of anger among Kenyans as the decry the loss of their hard earned money to corruption calling for the president to enhance his war against the vice so that the people can get value for their money through better roads and getting out of the woods the already dilapidated health sector.
Economic analysts have over the period warned the government against over borrowing saying it piling more pressure on the taxpayer who will be left to pay off the loans. Jibran Qureishi, Stanbic Bank regional economist says the over budgeting by the treasury is hurting the economy since the taxman does not collect as estimated by the treasury.
“When you do that from the beginning, you feel like you have enough room for maneuver when it comes to expenditure, but reality id you are not going to achieve the tax number,” said Mr. Qureishi.
In the 2018/19 fiscal year, the treasury estimates Kenya Revenue Authority to raise a whooping sh1.76 trillion with sh870.5 billion going into paying existing loans compared to sh435.7 billion committed to servicing loans in the last financial year.
Since the country’s economy upgrade to middle-income in September 2014,Kenya has no option for less cheaper international loans and therefore has been forced to opt for expensive short term loans with foreign commercial banks lending the country 37.85 per cent (sh968.9 billion) of the sh2.56 trillion external debt.
The legislature through the Parliamentary Budget Office in a report has warned of a looming crisis if the government continues with the current borrowing trend.
“The emerging concern is that the government’s appetite for borrowing is unlikely to wane any time soon and this could eventually push debt towards unsustainable levels,” read the report.