Rising public debt key concern among Kenyans as Yatani proposes cap

debt

The ever-rising public debt is now among the top concerns for many Kenyans who are struggling to make ends meet according to National Treasury Cabinet Secretary Ukur Yatani.

While presenting Jubilee administration’s last expenditure for 2022/2023 fiscal year, CS Yatani said the debt burden is one of the major concerns for Kenyans even as the government plans to borrow billions to fund the budget.

“We extensively consulted Kenyans. The insights, comments and suggestions have informed the priorities led in this budget. Key among the concerns, are the high cost of living, high level of unemployment among the youth, income inequity and pubic debt burden,” said Yatani.

Out of the current Kshs. 3.3 trillion expenditure for the coming financial year, treasury is proposing to borrow Kshs. 862.5 billion equivalent to 6.2% of GDP in the financial year 2022/23 to plug the deficit.

Externally borrowed funds will amount to Kshs. 280.7 billion with domestic financing amounting to Kshs. 581.7 billion equivalent to 4.2% of GDP.

Even as the deficit narrowed from Kshs. 1,024.3 billion in the current financial year, CS Yatani says fiscal consolidation measures put in place will see the deficit narrow to Kshs. 634.1 billion in FY 2025/26.

According to CS Yatani, the current debt stock is pegged at Kshs. 8.2 trillion has been been rated moderate and is sustainable with treasury initiating implementation of a set of measures to lower cost and risk in the public debt portfolio.

“These measures include cancellation of some non-disbursing external loans, re-arrangement of syndicated external loans and increasing the issuance of Treasury Bonds to lengthen the maturity structure and improve debt sustainability indicators. The preferred debt financing are highly concessional loans offered at below market interest rates with long repayment periods. Recourse to commercial borrowing has been maintained at minimum levels,” said Yatani.

Treasury is now seeking the amendment of the Public Finance Management Act to cap the debt to 55% of GDP in present value terms in order to tame the rising public debt stock.

“We’ve provided a requirement that the Cabinet Secretary National Treasury reports to Parliament whenever the debt levels swings beyond the threshold with time-bound remedial actions. This approach ensures that debt remains within sustainable levels and entrenches accountability and transparency in public debt management,” added Yatani.

Official figures indicate that the Jubilee administration has borrowed in excess of Kshs. 16 trillion to support its programmes key among them, the Big 4 Agenda.

As such, the economy has grown by 155% from the value of Kshs. 5.3 trillion in 2013 to Ksh 13.5 trillion in 2022.

Similarly, Kenya has risen from a low-income economy to lower middle-income economy as income per capita has increased 92.1%, from Kshs. 127,065 in 2013 to Kshs. 244,099 in 2021.

  

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