Despite staring at a Ksh10 trillion debt as it stands, Kenya is set to engage lenders to borrow more to meet it Ksh3 trillion 2021/2022 budget as mooted by The National Treasury.
The Draft Budget Policy Statement shows Treasury estimates total revenues to stand at Ksh1.9 trillion with ordinary revenues set to increase by 12% to stand at Ksh1.8 trillion
Treasury proposes the Ksh938 billion deficit to be plugged through borrowing. Of the said amount Ksh592 billion will be borrowed locally while Ksh345.5 billion will be borrowed externally.
National government expenditure is set to increase by 5.3% to Ksh1.9 trillion while the parliament’s allocation is set to increase to Ksh37.8 trillion from Ksh37.3 billion.
The Executive and the Judiciary are also set for a collision course with Treasury proposing the courts’ budget to be slashed to Ksh17.91 billion from Ksh17.99 billion.
Last week, China agreed to Kenya’s request to suspend Ksh27 billion debt payments slated to fall due between January and June 2021.
The previous week, Kenya was granted a suspension of Ksh.32.9 billion in repayments falling due to 10 countries represented in the Paris Club between January and June.
The Paris Club — which includes Belgium, Canada, Denmark, France Germany, Italy, Japan, Republic of Korea, Spain and the US also agreed to Kenya’s request for debt service suspension from January to the end of June.
By January this year, Kenya’s public debt stood at Ksh7.1 trillion. In the same month Treasury yielded to pressure from the International Monetary Fund (IMF) to include Ksh3.4 trillion parastatal and county loans as part of the country’s national debt pushing Kenya’s national debt past the Ksh9 trillion ceiling to Ksh10.5 trillion.
Borrowing an additional Ksh1 trillion will take the country’s public debt to Ksh11.5 trillion.
In October last year, economic analysts had raised the alarm over Kenya’s debt levels projecting that the public debt would hit Ksh9 trillion by the 2022 if that rate of borrowing was sustained.
“We opine that the KSh9 trillion public debt ceiling will be attained within the financial year 2022/23. That said, there is scope of hitting the ceiling in financial year 2021/22 if trends in recent fiscal years – where borrowing is revised upwards in mid-year budget revisions – is anything to go by,” Genghis Capital said in its Asset Weekly Strategy – 12th October 2020.
The government has borrowed more than the analysts projected signalling worrying times ahead.
It is not only the analysts who have raised concern with Kenya’s debt levels. A section of politicians have joined the bandwagon too.
In January, Senate Minority Leader and Siaya Senator James Orengo told President Uhuru Kenyatta to cut back on borrowing following the IMF’s move that forced the government to include parastatal and county loans in its public debt disclosures. He also warned the government against burdening Kenyans with more taxes.
“I am hoping that the government of President Uhuru Kenyatta is not going to borrow any more money. We have borrowed enough. There must be a time when you must learn to live within your means. IMF has told Kenya not to borrow any more because it is us who are paying,” said Orengo in an event on January 16.
“I remember when we were working with President Kibaki, he was very principled on the question of borrowing and taxation. You have to be very careful on these if you want to run a thriving economy,” added Orengo.