The IMF technocrats will particularly be interested in the specific measures put in place to tame both public debs and budget deficit.
The team is set to meet Treasury officials for a review of the future of three-year $1.5 billion (Sh151.5 billion) standby credit facility, which expires in March.
Treasury secretary Henry Rotich said last month, in the draft BPS 2018, that the target was to reduce the budget deficit to six per cent in the next financial year and further to three per cent by 2022,
The International Monetary Fund (IMF) assessors are set to put Treasury officials to task over Kenya’s huge appetite for foreign loans when they arrive in Nairobi next week.
The IMF technocrats will particularly be interested in the specific measures put in place to tame both public debs and budget deficit.
The team is set to meet Treasury officials for a review of the future of three-year $1.5 billion (Sh151.5 billion) standby credit facility, which expires in March.
“We believe that the fiscal deficit is too high and, therefore, also debt accumulation has been too fast and don’t think that targeted deficit of about eight and nine per cent is sustainable,” IMF resident representative Jan Mikkelsen said.
“We are happy that the government in the Budget Policy Statement (BPS) does indeed target a lower deficit in the coming years. And now we just need to discuss the specific measures to get this.”
The current standby credit, which is meant to cushion the economy from unforeseen external shocks, was granted by the IMF with a condition that the country lowers its budget deficit to 3.7 per cent of gross domestic product (GDP) by financial year 2018/19, which starts from July.
Mr Mikkelsen said the country’s fiscal deficit – bridged through borrowing – of 8.9 per cent of GDP in financial year ended last June was not sustainable.
Treasury secretary Henry Rotich said last month, in the draft BPS 2018, that the target was to reduce the budget deficit to six per cent in the next financial year and further to three per cent by 2022, largely through budget cuts.
Public debt nearly hit Sh4.59 trillion last November, Central Bank of Kenya statistics show, from Sh3.75 trillion a year earlier and Sh3.08 trillion in November 2015.
The bulk of the debt accumulated in recent years have been foreign loans which made up 51.4 per cent of the total debt last November at Sh2.36 trillion – Sh140 billion shy of the Sh2.5 trillion limit passed by the National Assembly in December 2014.
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