Central Bank of Kenya (CBK) data shows that Kenya’s debt grew by Sh481 billion between September last year and January this year to stand at Sh9.182 trillion, edging toward the Sh10 trillion borrowing cap set by Parliament last June. CRA had said Treasury's projections show the country’s total stock of public debt to be Sh10.133 trillion in the financial year 2023/24.
The Sh10 trillion debt ceiling, which Parliament established, is the maximum amount the government can borrow. It’s a limit on the national debt
If the debt ceiling isn’t raised after it's breached, further borrowing will not be possible, dealing a blow to the new government's plan to raise debt to fund national programmes
The Kenya Kwanza administration targets to borrow Sh3.6 trillion in its first five-year term
National Treasury Cabinet Secretary Prof Njuguna Ndung’u earlier maintained the State would opt for direct concessional budget funding from multilateral lenders instead of expensive domestic and foreign commercial debts
For new loans, Treasury will strive to borrow at “favourable rates, negotiate repayment periods that are not stressful, and invest in enterprises that give good socio-economic returns.
Prof Ndung’u said recently reliance on institutions like the International Monetary Fund (IMF) and the World Bank in the medium term to bridge the budget deficit would help reduce debt vulnerabilities.The government has delayed paying March salaries for most of its public sector workers, signalling a major cash crunch. Civil servant unions are now threatening to ask their members to down their tools from next week
Dr Ndii said the cash-strapped government has now been forced to prioritise other crucial State expenditures like honouring debt obligations over salaries
“Is public finance that difficult?” he posted on his verified Twitter account. “It’s reported every other day debt service is consuming 60 per cent of revenue. Liquidity crunches come with the territory.
Dr Ndii continued: “When maturities bunch up, or revenue falls short, or markets shift, something has to give. Salaries or default? Take your pick.
President William Ruto's administration, which came into office in September last year, has laid out plans for Parliament to replace the current public debt limit of Sh10 trillion with a debt anchor hinged on the Gross Domestic Product (GDP)
"In keeping with the global best practice on Debt Limit Policy, and in furtherance of the Administration’s quest to realise inter-generational equity through sustainable debt management, Cabinet considered the legislative proposal to harmonise the definition of ‘Public Debt’ in the Public Finance Management Act, 2012 and the attendant Regulations with the spirit and letter of Article 214 (2) of the Constitution of Kenya," said a Cabinet brief from State House recently
"In that regard, Cabinet approved the transmittal to Parliament of the legislative proposals replacing the nominal debt ceiling of Sh10 trillion with a debt anchor set at 55 per cent of GDP in present value terms.
The Commission for Revenue Allocation (CRA) recently warned the country is set to breach its Sh10 trillion debt ceiling – with Kenya’s financial stability at stake. " . . ” ” . . ” . . . . s.” . . . .
