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Analysts caution public debt may pass 60pc of GDP

The government cut its growth forecast this year to 5.1 per cent from an earlier projection of 5.9 per cent . FILE PHOTO | NMG
National Treasury building in Nairobi. The government cut its growth forecast this year to 5.1 per cent from an earlier projection of 5.9 per cent . FILE PHOTO | NMG 

Kenya’s appetite for loans to finance recurrent expenditure that now consumes most of total revenue could push the country’s public debt above 60 per cent of the GDP this fiscal year and hurt growth.

This underscores the government’s fiscal weakness, Commercial Bank of Africa (CBA) said in a markets note, adding that it was hurting investment in projects.

“Reduced public investment spending on development projects could consequently undermine the much-needed sustained long-term economic support that the country requires to bounce back,” the CBA said.

The government cut its growth forecast this year to 5.1 per cent from an earlier projection of 5.9 per cent and below the 5.4 per cent five-year average, as the economy met headwinds of drought, slowing credit growth and prolonged electioneering that polarised the country.