Economy

Think tanks urge State to go slow on borrowing

treasury

The National Treasury building in Nairobi. PHOTO | SALATON NJAU | NMG

Summary

  • The experts who are drawn from the Institute of Economic Affairs (IEA) and National Democratic Institute (NDI) particularly took issue with the high risk of unpaid salaries and slowdown in the implementation of public infrastructure projects.
  • Kenya’s public debt crossed Sh8 trillion in September 2021, as money spent on debt service during the quarter increased by 47 percent (Sh22 billion).

A group of independent economic think tanks has stepped up pressure on the State to limit borrowing, warning that the rising levels of Kenya’s debt stock posed a threat to service delivery in the short term.

The experts who are drawn from the Institute of Economic Affairs (IEA) and National Democratic Institute (NDI) particularly took issue with the high risk of unpaid salaries and slowdown in the implementation of public infrastructure projects.

“The fact that debt service has been going up is squeezing the funds available on the recurrent side to be able to undertake operation and maintenance,” John Mutua, Programmes Coordinator at the IEA said on Monday during the launch of an assessment report on public debt in Nairobi.

Kenya’s public debt crossed Sh8 trillion in September 2021, as money spent on debt service during the quarter increased by 47 percent (Sh22 billion), compared to a similar period in 2020, according to the Controller of Budget. The government spent Sh204 billion between July and September 2021 settling debts.

Kenya has come under pressure amid subdued revenue collection performance prompting the Treasury to turn to debt to finance some key programmes and projects.

“The trend is if for every Sh100 that is being collected by the KRA, you are paying Sh65 to public debt and it means that we are running into problems,” another expert from IEA, Raphael Muya said.

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