The World Bank is warning that Kenya’s appetite for domestic debt is going beyond what is recommended. Understandably, the government is borrowing to finance the budget deficit.
However, this should be done carefully so as not to lock out the private sector on whom the Treasury depends for tax revenues. Private businesses depend on Kenyan commercial banks to operate and plan expansion.
In the just-ended financial year, the Treasury raised domestic borrowing by Sh50 billion to Sh475 billion while in the current year, the figure will increase to Sh586.5 billion.
One of the major reasons the government is looking inwards is the hurdle it is facing on the international capital markets that are known to offer friendlier terms.
We ask the government to work with an acceptable ratio that will not hurt private businesses whose taxes determine the revenues collected.
It is therefore incumbent upon the government to unlock more funding from global sources than is the case today.
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