Editorials

Tame debt appetite

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Treasury CS Ukur Yatani. FILE PHOTO | NMG

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Summary

  • The growing debt appetite has become particularly dangerous in recent years when borrowing in foreign currencies such as the dollar has picked up, exposing the country to greater credit risks when the shilling depreciates.
  • It is therefore essential that borrowing should be increased only when absolutely necessary.
  • Further, projects with the biggest payoffs in terms of jobs, revenue generation and quality of life should be prioritised.

The Treasury says it will soon ask Parliament to raise the debt cap from the current Sh9 trillion without specifying what the new limit will be.

That sounds all too familiar, but there is need to ensure that the ever-rising borrowing appetite is justified.

It goes without saying that the rising debt pile comes at a heavy cost, with interest payments gobbling up more than a quarter of ordinary revenue.

The growing debt appetite has become particularly dangerous in recent years when borrowing in foreign currencies such as the dollar has picked up, exposing the country to greater credit risks when the shilling depreciates.

It is therefore essential that borrowing should be increased only when absolutely necessary. Further, projects with the biggest payoffs in terms of jobs, revenue generation and quality of life should be prioritised.

It is not inevitable that all the ongoing and planned projects must be seen through. This is an opportunity to toss out or put on hold expensive projects that were planned during the good times of uninterrupted economic growth and expectations of a windfall from the discovery of oil in Turkana.

The Treasury says it could save more than Sh150 billion from cancellation of stalled public projects. It should make good on the projects’ review.