In the current financial year, Parliament approved the national budget with a deficit of Sh635 billion to finance the operations of the national and county governments.
This means that by the end of the fiscal 2019/2020, the country’s debt will be about Sh6.3 trillion.
Civil society and donor community have raised concern on sustainability of increasing debt burden.
The National Assembly Wednesday voted to increase Kenya’s debt ceiling to a whopping Sh9 trillion, putting the country at the risk of being mortgaged.
This is despite opposition from the civil society and the donor community on the sustainability of the increasing debt burden against a not-so-well growing economy.
Only two MPs, Patrick Musimba (Kibwezi East) and Mohamud Mohamed (Wajir South) opposed the ceiling, saying, it was overburdening Kenyans, but their protestations went unheeded as they were out-muscled.
“This country requires to be salvaged from loans,” Mr Mohamed said even as he dismissed Kenya’s comparison to major powers like Japan in terms of debt levels.
“Japan is not Kenya and Kenya is not Japan, which is backed up by industrialisation and borrows from itself,” the MP said.
Previously, the debt ceiling has been pegged at 50 per cent of the Gross Domestic Product (GDP), but the MPs amended the Public Finance Management (PFM) Regulations as proposed by Treasury acting Cabinet Secretary Ukur Yattani to substitute it with Sh9 trillion.
The Treasury says that the new target in numerical limit will provide clarity in terms of controls and real-time oversight mechanism on the growth of public debt and safeguard public debt at sustainable levels as per the Constitution.
Even as the Treasury justified increased borrowing, House Minority Leader John Mbadi (Suba North) warned that the government has already violated the PFM Act by exceeding the current limit. He said the debt of Sh5.8 trillion is already above 50 per cent of the GDP.
Kenya’s Sh5.8 trillion debt as of June this year is some 62 per cent of the GDP.