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Economy

Jubilee eyes Sh1.84trn in more public debt before Uhuru exit

kenya debt
The government has defended the increased borrowing, saying the country must invest in its infrastructure, including roads and railways. FILE PHOTO | NMG 

President Uhuru Kenyatta’s administration will accumulate about Sh1.84 trillion more in public debt before his term ends in August 2020, revealing increased pressure on taxpayers’ funds.

Treasury chiefs project in draft Budget Review and Outlook Paper that total debt will jump to Sh7.65 trillion in the year ending June 2022, from nearly Sh5.81 trillion this June. The debt projection has been revised upwards by Sh480 billion compared to the forecast set last year, underlining the government’s appetite for debt.

Kenyatta administration will have borrowed at least Sh5.76 trillion to implement his manifesto in the 10 years of power after inheriting slightly more than Sh1.89 trillion in June 2013 from the Kibaki government.

The Jubilee administration has ramped up spending since 2013 to build much-needed new roads, a modern railway, bridges and electricity plants, driving up borrowing to plug the budget deficit.

The increased debt has seen Kenya commit more than half of taxes to repaying loans, leaving little cash for building roads, affordable housing and revamping the ailing health sector.

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Repaying loans

In the year ended June, Kenya spent Sh826.20 billion on debt repayments or 57.37 percent of the Sh1.44 trillion tax collected in the period.

It spent Sh306.52 billion on projects, accounting for 14.20 percent of the Sh2.16 trillion total national government expenditure.

Public debt stood at Sh5.81 trillion in June 2019, up from Sh5.04 trillion a year earlier, Sh4.41 trillion in June 2017, Sh3.62 trillion in June 2016, Sh2.83 trillion in June 2015, Sh2.37 trillion in June 2014 and Sh1.89 trillion in June 2013.

“In absolute terms, Kenya’s debt is sustainable, but the trajectory of expanding public debt is unsustainable.

"Even as percentage of the GDP, we have seen greater acceleration over the past five to 10 years,” Mukhisa Kituyi, United Nations Conference on Trade and Development secretary-general, told a forum in Nairobi last week.

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