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Economy

More pain as debt repayment takes 57pc of tax collections

Treasury secretary Henry Rotich.
Treasury secretary Henry Rotich. FILE PHOTO | NMG 

The Treasury spent Sh57 out of every Sh100 it collected in July and August to service debt, underlining the burden of mounting government borrowing on taxpayers.

Debt repayments consumed Sh118.08 billion in the first two months of this financial year that started in July, Treasury statistics show, a jump from Sh35.08 billion recorded in the similar period a year earlier.

That’s an equivalent of 57.66 per cent of the Sh204.79 billion in total tax collections, Treasury secretary Henry Rotich says in the latest report on revenue and exchequer issues.

The spend on debt made up just 18.68 per cent of the Sh187.77 billion tax collections in the corresponding period in the financial year which ended last June, meaning the taxman has raked in Sh17.03 billion more this year.

Debt obligations have, however, shot up this year as semi-concessional and commercial borrowing the Jubilee administration has contracted over the last five years became due.

This has denied the Treasury cash for other expenditures in a period that saw 32 of the 47 counties receive no funding from the national government.

In the July-August period, the repayments were the second single largest spend after recurrent expenditures such as salaries, allowances and administrative expenses, which gobbled up Sh133.23 billion.

The recurrent expenses were Sh16.52 billion less than the expenditure a year earlier, mirroring the absence of one-off cash demand for General Election.

The repayments, which are a priority, appeared to exert pressure on the exchequer in the two months, eating into other expenditure such as disbursements to the counties.

Mr Rotich says, in the Statement of Actual Revenues and Net Exchequer Issues as at end of August, published last Friday, only of 15 out the 47 counties had received cash from the exchequer in the first two months of this financial year.

The Sh11.69 billion spent on development projects, Sh7.27 billion paid to pensioners and the Sh4.03 billion released to the 15 counties, accounted for a fifth of what was paid to creditors in the two months.

The Treasury plans to spend nearly Sh870.62 billion on debt obligations by end of this fiscal year in June 2019, comprising Sh505.86 billion in domestic obligations and Sh364.66 billion to foreign creditors.

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