The strong dollar has once again reminded Kenya of the risks of the mounting public debt.
Just like many countries in emerging nations, Kenya is feeling the pain of local currencies plunging against the dollar: the de facto currency for global trade.
Kenya in the year to June required an extra Sh5.4 billion for foreign debt repayments after the local currency shed 9.5 per cent against the dollar in the period.
There is little Kenya can do to influence the strength of the dollar. But there is much the country can do to ease the growing public debt now that analysts warn that a debt crisis could follow the currency woes in the emerging nations.
A steep rise is squeezing dozens of lower-income nations, chiefly those that rely heavily on imports of food and oil and borrow in dollars to fund them.
The Treasury should cut its appetite for foreign loans as Kenya seeks to plug a Sh862 billion budget hole for the year to June next year.
The implications of Kenya’s rapid accumulation of debt are stark. The rising repayments are draining the public purse and forcing higher taxes upon the already stretched taxpayer.
Therefore, the Treasury should consider other options before taking the path of seeking additional debt.
There is additional room to cut non-essential expenditures such as travel, entertainment and training expenses, to rein in the fiscal deficit. The three items gobble billions.
As well as runaway spending, the government has not been aggressive enough to stamp out widespread corruption as hundreds of billions of shillings in public funds are lost every year.
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Note: The results are not exact but very close to the actual.
