In Summary

  • The total public debt has now risen to an equivalent of more than half (52.6 per cent) of the gross domestic product (GDP), on the back of massive increase in borrowing since the Jubilee administration took power four years ago.
  • The government’s cumulative revenue collection for the period July last year to March this year amounted to Sh984.6 billion against a target of Sh1.05 trillion.
  • Kenya has in the past four years borrowed billions of shillings to finance power generation and road construction projects.

Kenya’s public debt crossed the Sh4 trillion mark at the end of March this year, reflecting the Jubilee government’s sharp appetite for loans.

This has raised fears of the country’s future ability to repay the mounting credit.

The latest Quarterly Economic and Budgetary Review report released Wednesday by the Treasury shows that total public debt has now risen to an equivalent of more than half (52.6 per cent) of the gross domestic product (GDP), on the back of massive increase in borrowing since the Jubilee administration took power four years ago.

The public debt comprises 51.9 per cent foreign and 48.1 per cent domestic loans.

“The gross public debt increased by Sh782.3 billion from Sh3.26 billion as at the end of March 2016 to Sh4.04 trillion, equivalent to 52.6 per cent of GDP by March 31, 2017,” says Treasury in the report tabled in Parliament.

“The overall increase is attributed to increased external debt due to exchange rate fluctuations, disbursements from external loans and more uptake of domestic debt during the period.” The rate of increase in the debt load, however, does not correspond with growth in revenue generation, indicating the widening gap and mounting pressure on government’s capacity to repay loans.

The ability to generate and grow tax revenue is a strong indicator of future ability to repay debt.

The Treasury report shows that the government’s cumulative revenue collection for the period July last year to March this year amounted to Sh984.6 billion against a target of Sh1.05 trillion.

“This represented an under-performance of Sh65.9 billion mainly due to shortfalls in income tax, (fees, charges and court fines) collection, Investment Income and Imports Declaration Fee (IDF),” says Treasury in its documents.

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