President Uhuru Kenyatta has maintained that the government borrowing is sustainable despite increased public concerns.
While defending the huge infrastructure projects that accounted for the majority of debt the country has accumulated during his nine-year term, the president said that borrowing for development in the trend across the world.
Despite Kenya’s non-concessional loans having raised fiscal vulnerabilities and interest payments to nearly 20 percent of revenues, he maintained that it’s through the loans that Kenya grew its wealth of our nation from a GDP of 4.5 trillion in 2013 to close to 13 trillion in 2022.
“I pose to the nation; How much is too much borrowing? When does it become unbearable to a nation? The only time debt is a burden to a nation is if a nation is led by looters. We should not shy away from using other people’s money,” President Kenyatta said.
Kenya’s public debt hit Ksh8.02 trillion ($70.97 billion) in December 2021 with debt repayments accounting to one third of countries budget.
However, president Uhuru Kenyatta opted to focus on the economic growth that the country has achieved saying that the country is projecting to collect Sh. 2 Trillion by the end of the Current Financial Year.
“As a mark of this remarkable growth, our tax revenues have doubled from Ksh. 800 Billion in FY 2012/13 to Ksh. 1.662 Trillion as at April 2022,”
While acknowledging that corruption is still a challenge in the country the president pointed out that the devil of corruption is still alive and well in Kenya.
“Firstly, you cannot do the Big Push Investments in dams, roads and rail in an environment of corruption,” he added.
According to treasury budget estimates for the 2022/23 fiscal year show that slightly more than half (Sh15.62 billion) of the projected loans in the coming year will still be injected into infrastructure projects under the Ministry of Energy largely power transmission infrastructure and Infrastructure Department [largely roads] which will get Sh5.73 billion.
Already theNational Treasury has proposed an increase in debt ceiling from the current Sh9 trillion to Sh10 trillion in order to enable the Government to borrow more to finance the Sh3.33 trillion budget for the 2022/23 financial year.
As part of the Public Finance Management (Amendment) Regulations, 2022, the treasury sought to revert to a debt ceiling that is calculated according to the Gross Domestic Product of the country, the cap on public debt was set at 55 percent of the GDP.
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