Kenya’s borrowing from the World Bank has hit a new high after a sh54 Billion top up in the last three months to cater for the 2017/2018 financial year budget shortage.
The figures have now seen China go down to second position in which Kenya owes the Chinese government a total of sh557 billion as the World bank tops the list with a debt of sh 581 billion on Kenya’s shoulders.
Economists have already warned of the consequences of over borrowing citing that this will have multiple repercussions on the economy. Kenya’s borrowing has already surpassed the 5 trillion mark.
John Kinuthia, a researcher with International Budget Partnership (IBP) speaking to the Business Daily has however said the government had no option but to borrow as the financial year was coming to a close.
“We should look at the whole issue of public debt from the point of view of the fiscal deficit. If the planned deficit is over sh500 billion, as indeed it was, then such money coming from the World Bank should not surprise us,” Kinuthia said.
The researcher however warns of impending difficulties with the public debt repayment exceeded the recommended 30 per cent as a proportion of ordinary revenue.
“A middle-income country like Kenya should spend no more than 30 per cent of its ordinary revenue in paying debt. A developed country like Canada or Norway can spend as much as 35 per cent, but Kenya should not exceed 30 per cent,” said Kinuthia.
The most worrying fact that has got many economists and financial analysts worried is the nature in which the borrowing is done without full disclosure of the details and repayment mode therefore leaving the public speculating.
The proposal by Treasury Cabinet Secretary Henry Rotich to impose new taxes has been termed as way of raising funds to cover for the deficit and finance government projects.
Kenyans are set dig deeper into their pockets when the 16 per cent fuel Value Added Tax will take effect in the month of September which analysts say will have ripple effects across all sectors.
They insist that if the country is to achieve the big four agendas set by the president, the treasury should relook at the tax policies so as not to burden the citizens and also save the manufacturing industry from exorbitant fuel prices which is a main input in production.
Kenyans are already feeling the heat and should brace for more as the country starts to repay the Chinese debt that was used to construct the Standard Gauge Railway (SGR) whose commercial viability is in great question by experts.