Fresh from the parliamentary Budget and Appropriations Committee, the proposed government Budget for 2023/2024 drew gasps, this week, at the emerging 8.8 percent increase on the final Budget of the last government.
The oft-spoken fear, even as the international financial institutions claim Kenya’s debt load is not that high when taken as a percentage of GDP, is that the government may move from a cashflow crisis into debt default.
But, before we get wrapped up in whether one of the external financiers of our infrastructure or global supporters of our Budget is set to miss a repayment or suffer a rescheduling, we might as well focus on the costs that Kenyans are already paying for our government debt.
Certainly, if the Kenyan government was a company, no investor would be comfortable to see income running so severely below target: yet, by the end of March, our tax revenues were running at just two-thirds, or 66.6 percent, of their projected levels, as poor businesses paid poor taxes.
As a result, we have seen civil service salaries delayed, which is often viewed as almost the last stop before debt rescheduling, and the consequent heavy courting, rushed legislation and race to meet conditions to gain more budget support finance.
But, in business, Kenya’s debt spiral is already hurting, leaving countless Kenyan stomachs empty, as well as publicly listed companies teetering on the edge of administration and possible closure: thus causing those reduced tax payments, in the exact dynamic that sits at the heart of any true economic debt spiral.
For when government debt is crushing business, there is no tax revenue surge ahead to bat our way out.
And look at just the consolidated accounts for State corporations and agencies of 2021, where Sh1.8 trillion is listed in effective borrowing from Kenyans who have not been paid for the goods and services they have delivered or have provided Sh750 billion in rising refundable deposits.
To amplify that across every public interface, it plays out as companies laying off staff because they have been waiting for public sector payments for years now.
For small businesses or those youth businesses we are encouraged as public sector suppliers, to deliver stationery, food, and ICT services, how painful when, years later, the payment is nowhere, but spent on materials, ingredients and costs?
If I had to offer a pain rating on the cost of debt, a debt restructuring would be painful, late civil service salaries are painful, but crushing our businesses and entrepreneurs by taking their goods and never paying, that’s a pain level a whole strata higher.
And yet we barely talk about it, as our citizens pay this price of government debt.
The writer is a development communication specialist.
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