Kenya’s external debt has hit the Ksh5 trillion mark, all-time high in her history. This is after accumulating an external debt of Ksh2.448 trillion in three months, bringing it to a total of Ksh5.011 trillion. By the end of February, Kenya had borrowed Ksh2.563 trillion.
The tremendous growth of public debt has not only worried Kenyans but also government agencies.
According to sources in the country’s spy agency – the National Intelligence Service (NIS) – whose chief function is to ensure the nation’s safety and economic well-being, the organ is said to have classified debt as a threat to national security.
Speaking in a forum organised by the Vision 2030 Delivery Board, the Central Bank Governor Dr Patrick Njoroge attributed the escalated appetite for borrowing to corruption.
“It (corruption) affects our economy and our society first by shifting the resources away from the areas of greatest need into personal pockets or for the people that are involved in corruption. You end up having no money to finance education, no money to pay nurses, no money to repair roads because some of the resources have been deviated into other areas,” said Dr Njoroge.
Genghis Capital, an investment bank, forecasts that debt servicing could take up to 51.56% of revenue in fiscal year 2018/19 from 40.13% currently –exceeding the 30.00% debt sustainability threshold by a wide margin.
This comes at a time when the Cabinet Secretary in charge of Treasury is struggling to explain the disparity between the actual budget and the figures in the public domain.
Planned expenditure of the 2018/2019 fiscal year exceeds the targeted revenue collection by Ksh540 billion. However, CS Rotich argues otherwise.
“Difference between Ksh2.5 trillion and Ksh3 trillion is principal debt amortisation and rollovers, which are not treated as expenditures above the line,” says Rotich, as quoted by a local daily.
With the budget estimates exceeding the possible revenue collection, the government may be forced to borrow more to cater for the deficit. This means that the national debt may not drop any time soon.
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